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

Companies often misunderstand the research and development criteria necessary to qualify for innovation SR&ED consultingSR&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 food manu 2 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 to Maximize Your SR&ED Claims

Canada’s Scientific Research and Experimental Development (SR&ED) program provides over $4 engineer tools photobillion in tax credits to thousands of companies each year. Small businesses reap the benefits most with over 75% of funding going their way, and the program is constantly making Canadian companies competitive on the global market.

While the SR&ED program is extremely beneficial, it requires in-depth knowledge of current incentives and a familiarity of how to best prepare your claim for maximized funding.

Become an expert in SR&ED—or acquire external assistance

In order to first maximize your funding, someone in your company must be knowledgeable of the SR&ED program. Understanding which incentives the business qualifies for requires both time commitment and knowledge of the Canadian Revenue Agency’s (CRA) criteria.

If you company possess a small staff, or you want employees’ energy directed towards their projects, consider allowing an expert SR&ED consultant to manage your claim.  SR&ED experts, like Enhanced Captial Recovery, can not only help you make a claim, but in most cases significantly improve the amount of your claim. View our Youtube Channel for more information on how SR&ED works.

Keep up-to-date with Program changes

The SR&ED incentive criteria are constantly changing as new policies and requirements are introduced. Keeping informed with these changes is essential to maximizing your claim, and can best be followed by regular review of the CRA’s information bulletin.

However, the key points of these changes are often amidst extensive documents and are not simple to uncover. For example, a federal government budget report last October revealed changes to which expenditures are covered under the program.

Be aware of necessity to satisfy “technical merit”

An important step towards securing a tax credit is to understand that the program delivers incentives based on “technical merit”—gaining SR&ED funding is not a simple accounting exercise, and the process goes beyond discovering your initial eligibility of the program.

To qualify for an incentive, your business must demonstrate an occasion where it overcame technical uncertainty, or contributed to advancing an industry technology.

This could be making changes to a process to improve productivity or reacting to an unexpected obstacle with innovative expertise. Regardless of the experiment’s success, these attempts and processes need to be demonstrated in order to qualify for funding.

Document all research and development ventures

Satisfying SR&ED criteria is your company’s first requirement in applying for an incentive, but the ability to prove your contributions in the industry are equally as important. The CRA will likely consult with industry experts when reviewing your claim, making demonstration of your technological advancements and gained knowledge vital.

Keep track of any product trials, experiments to remedy unanticipated results, and documents explaining industry research, as these will be required when submitting your claim. Make sure to file all paperwork demonstrating company growth and job creation, as well.

Meeting with key employees often to capture these improvements is a good idea, and making a routine of discussing and documenting your expanding industry knowledge will ease the application process.

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.

 

 

Comparing SR&ED and IRAP for Research & Innovation Funding

The Canadian federal government offers two incentive programs to businesses conducting research and innovative projects: the Scientific Research and Experimental Development (SR&ED) and the Industrial Research Assistance Program (IRAP).

The SR&ED and IRAP are two of the largest federal incentives in Canada and share a goal of encouraging economic growth through research and development projects.

The two programs have their differences, and for Canadian business owners deciding which is best for their company can be difficult. Here are the key aspects of the SR&ED and IRAP.

Governing bodies and target applicants

SR&ED—The program’s mandate is to “encourage Canadian businesses of all sizes and in all sectors to conduct research and development in Canada.”  The Canadian Revenue Agency governs the program and provides funding in the form of a tax refund or credit.

A variety of industries are included in the program’s scope, including, but not limited to: oil and gas, manufacturing, environmental technologies, food processing, agriculture, and pharmaceuticals.

IRAP—Operating as a federal grant program, the IRAP is headed by the National Research Council. It is one of Canada’s oldest funding incentives and has provided developing enterprises with grants for over 60 years.

The IRAP aims to “stimulate wealth creation for Canada through technological innovation” by investing in projects that strengthen the national technology industry. The program is open to small and medium-sized companies with fewer than 500 employees.

How and what kind of resources provided

SR&ED—Funding through the SRED is given in the form of a tax credit or refund with the amount based on each company’s tax claim.

Greater funding is given to Canadian Controlled Private Corporations (CCPC), which involves a variety of criteria but essentially requires companies to be a Canadian owned and operated private corporation.

Credits are issued for a variety of expenses, such as equipment and material costs, employee wages, and overhead spending.

IRAP—The IRAP has offered non-repayable grants up to $1 million, but generally range from $10,000 to $250,000. The application process is screened over a variety of stages, taking into consideration the company’s prospects of further development.

The program goes beyond financial assistance by providing strategic support and partnering companies with establishing industry professionals. Approved applicants are linked with Industrial Technology Advisors (ITA) for one-on-one assistance.

While there is greater guidance available under the IRAP, there are also increased expectations on behalf of the company. Applicants are usually required to submit a detailed business plan with an explanation of how the funds will be used, and there is more contact between the corporation and ITAs.

Why Work with SR&ED Consultants?

Like most government incentives, both the SR&ED and IRAP require an in-depth understanding of the programs to take advantage of available resources.

Professional consultants like ours at Enhanced Capital Recovery (ECR) are available to help clients capitalize on their applications and benefit most from the company they worked hard to build.

Our SR&ED consulting team, with offices in Vancouver, Edmonton and Toronto has brought success to numerous organizations, including those whose claims were initially turned down by the Canadian Revenue Agency. Your company will work with SR&ED Consultants knowledgeable in your industry to recover the most funding possible.

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