If you’re reading this article, you already know about the tremendous value of the $3 Billion + worth of innovation funding supplied by the Federal Government of Canada through SRED. What you might not know is how to properly document your projects, to provide a successful SRED claim and a wonderful tax return that can fund further R&D projects and contribute to your bottom line.
The importance of documenting your SRED claim properly
Enhanced Capital Recovery is an end-to-end SR&ED consulting firm, but one area that we add significant value in when we first meet a client is setting them up to capture and document all future SRED eligible projects.
Not only do we add value to your SRED claim today, we help you to add value to your future SRED claims as well – and therefore your company will neither miss claiming valid projects or struggle to prove a claim to the Canada Revenue Agency.
Insights into what the CRA is looking for in a well documented SRED claim
Demonstrate a Methodological Approach
To successfully claim a project as SR&ED, there must be some technological uncertainty that your company is attempting to overcome. Not only must there be technological uncertainty, however, there must be a hypothesis and planned steps to verify or test the hypothesis through to its conclusion.
Merely attempting various solutions will not suffice as this is considered trial and error testing where the only learning is what doesn’t work, not how to adapt and get closer to the desired solution. It’s not even critical that the desired hypothesis is proven – the experimentation could lead to failure and still be submitted as SRED! What is important is that a systematized and documented approach was taken.
Documentation should be completed as the project occurs
This is where it is important to be thinking about SRED at the outset of a project and not afterwards. The CRA is looking for documentation that proves a systematic exploration of a hypothesis – or which steps were taken and why. For example, a failed hypothesis may lead to a new hypothesis. All of this should be documented and part of the SRED claim.
Also, time-tracking of employee contributions to the project as well as expenses related to the project are best proven when tracked along with the unfolding of the project. In general this all has to be set up in advance of the project and takes some extra discipline and diligence during the process.
Why choose Us?
Enhanced Capital Recovery offers its clients a simple go-forward tracking system to help document and track a SR&ED project to the CRA’s strict standards. If you want to capitalize on a SRED claim either now or in the future, start thinking about how you are going to track and document your project. It could mean the difference between the success or failure of your claim.
Please contact us for more information or for a free consultation to see how we can support your company’s SRED claim today!