Tag Archives: SR&ED consultants

How to Get the Most Out of Your SR&ED Claim

Businesses in Canada have long been taking advantage of the benefits of the Scientific Research and Experimental Development (SR&ED) program. With up to 60% of funding provided for innovative research and development in commercial applications, SR&ED claims have assisted many Canadian companies in funding their R&D projects and remaining competitive in the global market.

While the SR&ED program is extremely beneficial, if not done properly, it could lead to review and rejection by the Canadian Revenue Agency (CRA). In fact, SR&ED claims require in-depth knowledge of current incentives and a familiarity of how to best prepare your claim for maximized funding.

SR&ED claims require specialized knowledge

In order to first maximize your funding, the person preparing the claim must understand the intricacies of SR&ED and other R&D incentive programs. Understanding which incentives the business qualifies for requires both time commitment and knowledge of the Canadian Revenue Agency’s criteria.

For organizations with a small, specialized staff, the majority of their energy is directed towards working on their projects. In these circumstances, it makes sense to consider hiring an expert SR&ED consultant to manage the claim. SR&ED consultants, like Enhanced Capital Recovery, can manage the claim end-to-end and in most cases greatly improve the amount of your claim.

The SR&ED program is changing rapidly

SR&ED program policy is rapidly evolving due to the goals of the program and politics. Keeping informed of policy changes is essential to maximizing your claim and reducing the risk of claim rejection.

However, this can be a challenge for a busy organization that does not have a specific individual to handle SR&ED claims. CRA policy changes can be complex and require interpretation to understand fully.

SR&ED is a technical matter as much as it is an accounting exercise

An important step towards securing a SR&ED tax credit is to understand that the program is not a simple accounting exercise. SR&ED is based on technical merit and therefore requires proper technical documentation, in addition to financial documentation. Successfully achieving SR&ED funding goes well beyond the first step of discovering your company’s eligibility of the program.

Essentially, to qualify for an incentive, your business must demonstrate that it contributed to advancing an industry technology. This involves a scientifically documented process of overcoming technical uncertainty and contributing to the advancement of a new 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.

Proper documentation of SR&ED projects is critical

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 and experiments to remedy unanticipated results, and documents explaining industry research, as these may be required when submitting your claim.

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.

Contact Enhanced Capital Recovery for a free consultation to find out how we can help you get the most out of your SR&ED claim.

BC SR&ED

BC Finance Minister Mike de Jong’s provincial budget announcement in late February this year included continued support for BC’s innovation-driven companies. Although the Federal version of SR&ED is a continuous offering, BC offers its own credit on top of the federal tax incentive.

As per the BC Government website, “qualifying corporations that are Canadian-controlled private corporations (CCPCs) may claim a refundable tax credit of 10% of the lesser of:

the corporation’s SR&ED qualified B.C. expenditures for the tax year, or
the expenditure limit (generally $3 million), as defined in the federal Income Tax Act

A non-refundable tax credit may be claimed for expenditures in excess of the expenditure limit. The non-refundable credit may also be claimed by other qualifying corporations and CCPCs that are not eligible for the refundable credit. The non-refundable credit for a tax year is 10% of the corporation’s SR&ED qualified B.C. expenditure for the year less:

the amount of its refundable credit for that year, and
any amount renounced for that year”

How significant is the BC SR&ED program

According to provincial Finance Ministry figures the tax credit was worth $154 million to B.C. companies in 2013-14, with expectations it will represent about $99 million in 2014-15 and $180 million in 2015-16.

The amount of SR&ED returns for the BC SR&ED program show how significant the program is, especially to BC’s $3 billion tech industry. SRED is one of the key things the government does to support the tech sector. It supports R&D which is something most companies consider essential and at the same time struggle to find funding for.

The SRED tax credit allows companies to do research and development they may otherwise not be able to afford. Through the SR&ED program, companies can claim an off-setting tax credit for expenditures related to wages, materials, machinery, equipment and some forms of overhead.

For Canadian controlled corporations in the start-up phase, SRED is critical to their survival. It allows start-ups to invest in research and development in order to stay competitive in the global marketplace and to have the opportunity to expand their product and service lines.

Contact Us

Enhanced Capital Recovery can help with all of the many possible research and development funding incentives in Canada, including the BC SR&ED program, and help your company improve its research capability and bottom line.

R&D Funding for the Oil and Gas Industry

Canada’s oil and gas industry is a backbone of the country’s economy and the federal government is rewarding these companies with R&D tax incentive, such as SR&ED tax credits. However, businesses often shy away from applying due to misconceptions about the program.

The Canada Revenue Agency (CRA) excludes any oil and gas prospecting, exploring, drilling, and production operations from funding—but there are plenty of other related activities that could allow your business to recover up to 65% of eligible expenses.

To qualify, your company needs to have surmounted a technical uncertainty using scientific research or experimental development. Here are examples of what activities can and cannot qualify for funding and what you can do to capitalize on SR&ED tax credits.

What types of work are eligible?

While direct oil and gas operations are excluded from the SR&ED program, there are many opportunities to apply for funding. Creating or improving technology to advance a process, such as new software for more efficient automated engineering, is a common project in the industry.

The manufacturing sector also offers opportunities. Experimenting to improve hydraulic systems, A-frames, rubber components, or equipment that reduces environmental harm may be accepted.

Keep in mind other areas that are not directly related to the oil and gas industry, but could be an eligible everyday activity. For example, perhaps you improved your transportation or storage equipment to overcome a technical setback.

What projects do not qualify?

As mentioned, the CRA states that “prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas” do not qualify for SR&ED funding. Other activities like routine testing or data collection, market research, or advertising are also excluded.

How should I prepare for a claim?

Before beginning any projects that may qualify for SR&ED funding, it is important to document the entire process. The CRA will request all details about the research or development your company conducted, whether the projects were deemed successful or not.

The review team will also require information about which employees worked on the project, what tasks they performed, and what amount of their time spent working was allotted to the project.

How can Enhanced Capital Recovery help?

Hiring a professional SR&ED consulting firm like Enhanced Capital Recovery is especially worthwhile for oil and gas claims. These businesses often partner with outside companies and foreign joint ventures, making the SR&ED application a complicated process.

We are not only specialized in SR&ED procedures, but we are oil and gas experts as well. You will work with a highly skilled consultant who is familiar with the industry language the CRA expects.

To schedule a no-obligation discovery assessment, contact Enhanced Capital Recovery today and learn how much of your expenses could be recovered through the SR&ED program.

Tax Credits for Farmers & Food Industry

The food, beverage, and agriculture industries offer many opportunities to capitalize on SR&ED funding. In making your business competitive in Canada, you’ve probably experimented with your normal routines or tried developing new products.

Once satisfying the basic requirements, the scientific development does not need to be groundbreaking to benefit from funding—it can be as simple as adding a gluten-free version of a popular treat to you bakery’s menu or finding a use for everyday waste materials.

Here are some examples of everyday farming and food processing projects that could be eligible for SR&ED funding:

Farming and Agriculture

As populations rise and conventional farming methods become dated, the federal government is rewarding farmers who advance agriculture techniques. Modifications that increase crop yield or altering equipment to increase production and safety are common projects.

Attempts to make your farm more environmentally-friendly also benefit from funding, such as developing alternatives to harmful chemicals, using equipment that requires less energy, or improving irrigation techniques and routines for reduced water use.

Finding a practical use for traditional waste (manure, groundwater, or leftover livestock feed) can receive funding, such as altering equipment to be powered by unused grains or corn.

Processing and Manufacturing

Food processing companies also reap the benefits of SR&ED funding. For example, developing an existing product to meet consumer needs of gluten-free, sugarless, and nut-free foods is a simple and common procedure that many food processors and restaurants already do.

Experimenting with ingredients to extend a product’s shelf-life or to improve flavour and nutrition also qualify. Conducting research on the impact of a process, such as your storage or shipping techniques are included in the program as well.

Vineyards and Breweries

In trying to create the next must-have wine, there’s a good chance you altered your usual process. Experimenting with soil types, grape selection, and water control are everyday activities that qualify for tax credits.

Funding is also available for breweries. Examples of eligible projects include changing the bottling process for better efficiency, experimenting with hops to improve flavour, or developing new packaging to reduce materials.

Plants and Greenhouses

Everyday greenhouse operations could also lead to your business receiving SR&ED funding. Modifying seed combinations, experimenting with temperatures, and determining how to better grow plants that are non-native to your area are examples that may qualify.

Various types of research may also be eligible, such as examining how different temperatures, lighting, and irrigation routines impact growth. Be sure to record all experiments and research details, no matter of the success.

Many businesses across Canada are satisfying the requirements without realizing they may be eligible to recover up to 65% of their eligible expenses.

To find out how your routine food and agriculture activities could result funding, contact Enhanced Capital Recovery today for a no-risk consultation. We’re your SR&ED consulting experts in Vancouver, Edmonton and Toronto.

What Your Accountant Doesn’t Know About SR&ED

If your accountant is handling your SR&ED claim, you may be leaving opportunities on the table to significantly improve your claim. The fact is, filing an SR&ED claim is more of a technical exercise than an accounting exercise. In-house accountants may be qualified to handle the accounting aspects of the claim, but the key to maximizing your claim and having it approved, lies in proper tracking and definition of projects, a thorough understanding of what qualifies for SR&ED and technical documentation.

Accountants are simply not Engineers and may have little understanding of the technical aspect of SR&ED. In short, accountants lack the required scientific and industry-specific knowledge to identify and document a SR&ED claim. Specialized consultants like Enhanced Capital Recovery are both Engineers and Finance professionals, trained specifically to handle SR&ED claims. Here is how professional SR&ED consultants can take your SR&ED claim to the next level.

Maximizing your claim

Through the SR&ED program, Canadian businesses can recover up to 65% of eligible expenses with various tax incentives—SR&ED consultants understand how all of the applicable tax incentives work and can make sure they are applied. Whether you own a dairy farm in rural Alberta or software development company in Montreal, your Enhanced Capital Recovery SR&ED consultant will have industry specific technical expertise to help maximize your claim.

The SR&ED landscape is constantly shifting with new rules and new opportunities being introduced to enhance your claim. By staying up to date with SR&ED trends and news, SR&ED consultants are able to capitalize on these new opportunities.

SR&ED Consultants are industry experts

When you work with a SR&ED consultant, you are not only working with tax incentive consultants. SR&ED consultants have Engineering and Business backgrounds with matching expertise in everything from pharmaceuticals and chemicals to manufacturing and information technology.

Documentation is necessary when submitting a claim and the CRA expects industry-specific terminology and knowledge during the process. SR&ED consultants are able to document your claim to meet the CRA’s strict guidelines and standards.

Valuable industry partners

Experienced SR&ED consulting firms have developed networks and partnerships in industry. For example, ECR has become one of Canada’s most trusted SR&ED consulting firms by forming valuable partnerships in industry. SR&ED consultants also stay on top of news and policy changes, allowing for up-to-date information and a smoother, quicker claims process.

If your claim was previously rejected, a SR&ED consulting professional will help you determine the reasons it failed. Enhanced Capital Recovery has worked with several clients in this situation and were able to adjust their claim and get it approved.

Post-claim support

SR&ED consultants provide ongoing support. At Enhanced Capital Recovery, our client relationship doesn’t end when your tax credit is granted. Should the CRA review your claim, we will continue to support you through the entire process. We are also happy to work with you on future projects to determine SR&ED eligibility.

Risk-free consultations

Hiring a SR&ED consultant should not be a risk for your company. In fact an SR&ED consultant can take the risk of loss of time and loss of resources out of your SR&ED claim process. Working with ECR is risk-free—we don’t get paid until you receive a tax credit from your successful claim. There are no upfront or hidden fees and our services are based on a percentage of your credit.

Getting started with the right SR&ED consultants

All consultants at ECR are trained in SR&ED procedures and are skilled industry experts, but beware of other firms that contract work to technical writers or that may assign your claim to a junior consultant. We value all of our clients equally, no matter the services you require or the size of your business.

Please contact us about how ECR can assist your business today—let our SR&ED consulting professionals help you maximize your SR&ED claim while your accountant does the job that they do best.

SR&ED Claim Review? What to Expect from the CRA

What is the SR&ED Claim Review Process?

The Scientific Research and Experimental Development (SR&ED) claim review is a process involving many steps and individuals. But what exactly happens at the Canada Revenue Agency (CRA) once your claim is filed? Here is what you can expect during the review process.

Determining if you qualify

The CRA’s first step is determining whether your company and projects meet the basic criteria. Are you a Canadian Controlled Private Corporations (CCPC)? Is your T661 form completed correctly? Has your company attempted to overcome a technological uncertainty? Have you used research and development (R&D) to advance technology?

This is also the stage where a CRA financial reviewer inspects whether the expenses you outline in your claim are eligible costs for SR&ED program funding.

Technical aspect review

Once the basic requirements have been determined, the CRA science advisor—sometimes with the assistance of an outside industry expert—further inspects the technical aspects of your claim.

This involves the review team analysing whether your project employed R&D to solve a technological or scientific problem. It will also investigate how you measured the success of your project, and to ensure the knowledge gained was innovative to your company.

Request for information

In some cases, the CRA review team will request additional information. This can provide further evidence to support your claim or to answer questions for clarification. Should this be necessary, you will be contacted by a science advisor with a specific request.

An outside consultant may also be contracted during this stage to clarify information for the review team. The CRA is familiar with all consultants and confidentiality is ensured in every claim.

Site visit or interview

The CRA may request an interview or site visit when verbal clarification or additional documentation is insufficient. During an interview, the science advisor, possibly accompanied by a consultant, will identify the areas of your claim that are unclear.

The interview may also be to determine whether the projects were sufficiently documented and that costs were spent as claimed. For this reason it is essential to document and organize evidence of your claim.

Enhanced Capital Recovery can ease the process

Allowing a tax consultant like Enhanced Capital Recovery to take care of your SR&ED claim can ease the review process and even reduce the waiting period.

An accurate claim, complete with industry-specific information, will leave the CRA with less reason to request information or site visits for clarification. Our consultants are knowledgeable with the entire review process and could identify additional qualifying projects.

To find out how we can provide efficient assistance in submitting your claim, contact ECR today for a free consultation by phone at 1-800-470-0235 or email us at info@enhancedcapitalrecovery.com. We look forward to hearing from you.

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.

Already Claiming SR&ED? SR&ED Consultants

If you currently claim the SR&ED tax credit, then you already understand the value and importance of it towards your bottom-line. What you may not know, is, many claimants leave unclaimed funds as they miss identifying projects and related expenses because of an oversight or lack of understanding of the SR&ED process.

Recently, the CFO of a large western Canadian home builder felt they were under-claiming on their current filing and prior to filing it he invited Enhanced Capital to review claim. The resulting SR&ED claim increased 5 fold as an Enhanced Capital Specialist identified several additional projects that had been missed.

Had the CFO not called us prior to filing, his company would have missed recovering an additional quarter of a million dollars that the claim increased by due to the additional projects and expenses submitted.

SR&ED is 15% accounting and 85% technical. Failing to identify all eligible projects or not properly documenting can result in leaving thousands of dollars unclaimed.

This tremendous positive difference in returns should be left to the SR&ED experts, not to chance.

There are many examples of claims we have reviewed that did not clearly capture the challenges the organization faced and the obstacles and uncertainties that the CRA would understand and accept.

Our consultants at Enhanced Capital Recovery consist of Food Scientists, Computer Engineers and Manufacturing specialists who complete 100s of claims each year and have first-hand knowledge of what to claim and what to avoid claiming.

By matching the right technical expert for the job, we are able to help you identify all applicable projects and avoid overlooking any claimable activities – even those we find frequently left unclaimed by accountants and other consultants.

Chances are your competitors are maximizing their SR&ED tax refunds by utilizing experts to increase their competitive advantage; shouldn’t you be doing the same?

If you are already claiming the SR&ED tax credit, we can review your current claim to see if we can add value by identifying additional SR&ED eligible projects and related expenses. We will review your technical documentation and identify improvements that will ensure that your claim has the best chance of success. Best of all, since we only bill you on the value we add, if we aren’t able to add any value and increase your claim, you do not pay us anything while still ensuring your risk of leaving unclaimed funds is minimized.

If your claim is under CRA review, Enhanced Capital Recovery can help support the claim and if your claim has been rejected, we can help to review it and improve future claims so they are not rejected.

Our track record of 90+% success in claim defence and claim review speaks for itself!

Regardless of your field, or size of business, Enhanced Capital Recovery is here to help with your SR&ED claim by reviewing your current or past claim. For a free consultation, call Enhanced Capital Recovery at 1-800-470-0235 or visit us online at www.enhancedcapitalrecovery.com or email us at info@enhancedcapitalrecovery.com. We’ll help you quickly determine if there is an opportunity to increase your SR&ED claim.

Enhanced Capital Recovery. Driving innovation in savings and recoveries!

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.

How to Maximize Your SR&ED Claims

Canada’s Scientific Research and Experimental Development (SR&ED) program provides over $4 billion 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.

Document all research and development ventures

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.