Tag Archives: benefits of sr&ed

Does My Company’s Work Qualify for SR&ED Funding?

Each year, the Canadian Revenue Agency (CRA) provides over $4 billion in tax credits through the Scientific Research and Experimental Development (SR&ED) program, often to small or medium sized companies.

However, countless businesses across Canada miss out on these incentives despite satisfying the program’s criteria in their everyday activities. In fact, qualifying for SR&ED funding is easier than many think—here are the program requirements that your company may be satisfying right now.

Basic SR&ED criteria

The CRA outlines three requirements your business must complete to earn SR&ED credits:

You attempted to overcome a technological uncertainty
You used unfamiliar, systematic research and development to solve the problem
You aimed to advance a science or technology in the process

While the experiments must be conducted with a measurable goal, they can involve basic or applied research—advancing scientific knowledge with or without an intended use in mind. For example, if your goal is to improve an artificial flavouring, it does not need to be used for a specific food or beverage.

Your projects do not need to be successful to qualify for funding, as long as you can provide evidence of the attempt.

Scientific research

There is a misconception surrounding the program’s scientific research aspect that it is reserved for medical, biological, or other laboratory research. In reality, the research can be as simple as a video game producer researching methods of advancing game play graphics.

The results are not required to be innovative to the industry, but the acquired knowledge or technological advancements must be new to your business.

Experimental development

Many small businesses qualify for experimental development as part of their daily activities without realizing it. Conducting experiments to create new products, machinery and manufacturing procedures are accepted, but so too are innovative services and support work.

Improvements to existing technology also qualify, such as adapting computer software for enhanced efficiency or improving the machinery to manufacture clothing garments.

What doesn’t qualify?

There are some types of research and experimental development that do not qualify for SR&ED funding. Since the projects must be conducted with a planned approach, any random or routine investigations are not eligible, including quality control procedures.

Work that can be classified as commercial gain does not qualify, such as promotions, market research, or the commercial use of a new technology. Experimentation to a product’s style is also not accepted.

Procedures related to mineral, natural gas, or petroleum production, including exploration and drilling, also do not qualify for SR&ED funding.

Companies that file a claim could receive up to 65% of eligible expenses returned as a tax credit. To determine if your business is fulfilling SR&ED program requirements, contact Enhanced Capital Recovery for a free consultation today.

Do you have a SR&ED Claim? SR&ED Consultants Answer

Companies often misunderstand the research and development criteria necessary to qualify for SR&ED funding—their experiments failed, the technology advancements were minimal, their research has been conducted elsewhere, are common misconceptions.

While the Canadian Revenue Agency (CRA) does require certain criteria for funding, your company may have already fulfilled the research and development aspects. Here are four common reasons why companies decide not to pursue a SR&ED claim.

“Our work doesn’t qualify for SR&ED funding”

The CRA gives funding to companies from a wide range of industries. This may include:

Agriculture
Manufacturing
Food & Beverage
Engineering and Information Technology
Oil & Gas, Chemicals, and Green Energy
Medicine and Biotechnology

Funding is also available to companies who may not focus on these areas, but carry out day-to-day projects that qualify. For example, a barber shop that developed new computer software for scheduling appointments may qualify under information technology.

The CRA accepts claims from companies of all sizes, and small businesses conducting everyday experimental developments actually form a large portion of the claims.

“We did not meet our experiment’s goals”

SR&ED funding is awarded on the attempt of your project, not success. Three criteria are necessary to qualify: you must identify a technological problem, attempt to fix the problem with research and experimentation, and be able to demonstrate you did so in a systematic—not random—approach.

As long as your company attempted to overcome a technological setback using technology, there is a good chance it can qualify. Several expenses for the development may be claimed, including employee salaries and material costs

“Our research and experiments weren’t ‘groundbreaking’”

The scientific research necessary for funding is not required to take place in a laboratory or be related to medicine, biology, or other sciences. A baker experimenting with new ingredients to extend a product’s shelf life or a fish processing plant researching new canning methods could also qualify.

The research doesn’t need to be innovative to qualify, either. Your business can use existing information and resources in finding a solution, so long as the research gathered is innovative to the company.

“Our technological advancements were too minimal”

Another common misconception surrounding SR&ED is that significant technological advancements are required to receive funding. Your development doesn’t need to benefit the entire industry, as long as it solves your company’s technology problem.

Your business can also improve upon an existing technology to qualify, such as adapting a green energy solution for increased efficiency. Small advancements taking place over an extended period of time may also be accepted, especially if the time is used to gauge your project’s development.

If you are unsure of whether your business qualifies for SR&ED funding, contact Enhanced Capital Recovery today for a free consultation.

SR&ED Claims 101 for the Food Manufacturing Industry

Many food manufacturing and processing companies across Canada are fulfilling the criteria for Scientific Research and Experimental Development (SR&ED) tax incentives, yet few claim the available funding. How can this be the case?

In large part it’s due to a variety of misconceptions clouding the SR&ED application process. The main misconceptions are about the size a business needs to be and the type of R&D that’s acceptable. The fact is, businesses are not required to conduct laboratory research, or be a large-scale company.

So long as your business demonstrates a technological advancement or having solved a technical uncertainty, it could qualify—and those advancements don’t need to be as exceptional as you might imagine.

Who can benefit?

A wide range of food and beverage manufacturers may qualify for SR&ED tax credits. These can include:

Confectionary, dairy, starch and oil manufacturers
Seafood, poultry, egg, produce and fruit producers
Meat processing and slaughtering operations
Wineries, and beverage, tobacco, and specialty food companies
Pet and animal food manufacturers

Canada is home to thousands of food processing companies, in these categories and others. The best way to find out if your business qualifies is to arrange a no-obligation consultation with an SR&ED specialist.

What is technical uncertainty?

Establishing your company’s ability to overcome technical uncertainty goes a long way in applying for SR&ED funding—but what is it, exactly? It means that your business encountered an obstacle during a manufacturing or production process, and made steps towards solving it through your own investigation and without knowledge existing in the industry.

Examples could be a product confronted with challenges to its shelf life solved without using industry-established chemicals, or introducing a quicker process for enriching baked goods with vitamins and minerals to meet your distribution needs.

Technical uncertainty can be derived from something as basic as a new recipe resulting in unanticipated effects that your staff resolved using their own knowledge.

How might I have advanced technology?

Much like technical uncertainty, your company’s technological advancements in the industry don’t require laboratory examinations. Perhaps you increased your product’s flavour and texture using natural ingredients, or developed machinery for increased packaging efficiency.

The Canadian Revenue Agency awards merit of technological advancement based on attempt, not success. If your business encountered technical uncertainty, but failed to solve the problem, the research still helps the industry gain knowledge of the issue. The only requirement is that the effort was based on a systematic investigation—not random attempts.

Why is it important to track this information?

There is a good chance your food manufacturing business has made technological advancements, congratulations! But demonstrating these industry contributions is just as essential in applying for a tax incentive.

The criteria can be proved though conducting product trials and documenting the results, or indicating how the knowledge you gained will be applied to future development. It is important to record each development and research process fully in order to best qualify for funding.

ECR works with companies of any size, and many companies eligible for SR&ED are small businesses. With SR&ED consulting offices in Vancouver, Edmonton and Toronto, our team has brought success to many companies, including those whose claims were initially rejected by the Canadian Revenue Agency. Your company will work with a consultant knowledgeable in the industry to recover the most funding, with the least amount of risk possible.

For a no-obligation consultation, submit a contact form and our team will arrange a free assessment of your SR&ED case.

How the Technology Industry Benefits from SR&ED

The federal government’s Scientific Research and Experimental Development (SR&ED) program offers funding to a variety of sectors, and Canada’s Information and Communication Technology (ITC) industry is reaping the benefits.

While all sectors benefit from the program’s assistance, its contribution to the ITC industry allows Canadian technology experts to focus on their innovations rather than searching for funding.

The ITC sector grows with each new advancement and the SR&ED program helps make Canada a leading contributor to the global industry, while strengthening the national economy and creating jobs.

How SR&ED helps the ITC sector

The SR&ED program provides assistance through tax credit and return incentives, allowing Canadian ITC corporations to recover up to 65% of eligible expenses. The program contributed nearly $60 million to the sector in 2009 and the industry is continuing to expand.

A variety of sub-industries are included as ITC companies eligible for funding, allowing for a broad range of assistance in the sector. Areas include software and firmware development, telecommunications, artificial intelligence, and others.

The federal government is committed to Canada’s technology companies, and spends over a third of its research and development funding on the industry.

Tangible effects in the industry

Last year the ITC sector contributed over $62 billion to Canada’s GDP and its scientific research enterprise was ranked fourth in the world. That investment is already evident as technology companies contribute innovations to the global marketplace and see their profit margins flourish.

EcoSynthetix, an eco-friendly product manufacturer, relocated from Michigan to Ontario in favour of Canada’s government incentives and lower production taxes. It is now the country’s second-fastest growing technology company and is a world leader in green product supply.

In recent years Canada’s digital gaming industry has grown into one of the globe’s most competitive and successful markets. Industry giants Electronic Arts and Ubisoft have studios in Canada and several start-ups like BioWare and Other Ocean Interactive have found worldwide success.

Canada has also recently produced technology-advancing innovations, like Trusted Positioning Inc. redefining navigation systems and Pavemetrics Systems Inc. created a laser technology able to inspect transportation infrastructures at 100 km/h.

Organizations like these are benefiting by taking competitive advantage of incentive programs like the SR&ED program. From start-ups to small and large companies, if you’re not taking full advantage of such programs, you may be leaving valuable resources on the table.

Let Enhanced Capital Recover help your company

ECR works with companies of any size, and many of Canada’s ICT enterprises are smaller groups with fewer employees.

With SR&ED consulting offices in Vancouver, Edmonton and Toronto, our team has brought success to various Information and Communications Technology companies, including those whose claims were initially rejected by the Canadian Revenue Agency. Your company will work with a consultant knowledgeable in the industry to recover the most funding, with the least amount of risk possible.

For a no-obligation consultation, submit a contact form and our team will arrange a free assessment of your SR&ED case.