As tax season approaches, are you wondering if there are any R&D tax credits your company might qualify for? Canada’s Scientific Research and Experimental Development (SR&ED) Program is designed to help Canadian Controlled Private Corporations (CCPC) fund and make further investments in technological advancement.
According to published survey results by Canada Revenue Agency, approximately three-quarters of companies that apply to the program report annual revenue of $50 million or less – and there is no specific industry that this funding is limited to.
Who is Eligible for R&D funding?
Almost any Canadian company can be eligible to apply for Scientific Research and Experimental Development (SRED). Here are the details of the criteria from a company perspective:
- Your Research & Development took place within Canada
- You have proof of expenditures related to the claimed projects, for example T4s, and/or invoices
- You have ownership of the Intellectual Property resulting from the project
- You are in good standing with government financial reporting
- Your project expenses were incurred within 18 months of the fiscal year-end as of filing
The definition of technological advancements can be interpreted broadly and therefore is not limited to specific industries. Generally we work with a wide range of industries including:
- Information Technology, inclusive of hardware, software and electronics
- Food and Beverage
- Health Care and Medical
- Machinery & Equipment
- Plastics and Materials
What many businesses don’t realize is that some of the routine business challenges they face each year could be eligible for the SR&ED tax credit. For example:
- A food-services company improves its recipe for a frozen meat pie;
- A leather-garment manufacturer tries out a new dye and must test garments under various conditions to ensure that the dye stays in;
- A pharmaceutical company develops a new lightweight casing for medicinal capsules but discovers over time that it is not leak-proof and so can’t be used (note: unsuccessful R&D projects are still eligible for the SR&ED tax credit)
- An engineering and manufacturing company develops and modifies plastic molding technology so that it can protect testing components from the hostile oil and gas field environments.
All these activities, and many more business processes like them, result in knowledge improvement for the company and its staff and hence are recognized as SR&ED by the government and are eligible for an SR&ED tax credit. Many Canadian corporations in your industry, including your competitors, have received SR&ED funds to develop additional R&D projects and build their knowledge base. For companies with annual revenue of $10 million or less, the vast majority credited the SR&ED program with improving their cash flow and profits.
Why Choose Enhanced Capital Recovery?
As a top tier SR&ED Consulting firm, Enhanced Capital Recovery’s business is maximizing government incentives in the areas of Scientific Research and Experimental Development (SR&ED) tax credits for our clients. Since we are a highly specialized SR&ED firm, we offer clients depth of experience, important strategic relationships and insights, a systematized approach and an effective tracking and follow up system.
Wondering if your projects are eligible for an SR&ED tax credit? Please contact us today for a free consultation to see if you are eligible.