SR&ED Tax Credit Recovery

SR&EDservice

Scientific Research and Experimental Development is a federal tax incentive program, administered by the Canada Revenue Agency (CRA); that encourages Canadian businesses of all sizes, and in all sectors to conduct research and development (R&D) in Canada. It is the largest single source of federal government support for industrial R&D.

Highlights:

  • The SR&ED Program gives claimants cash refunds and / or tax credits for their R&D expenditures on eligible R&D work done in Canada.
  • The SR&ED program is most generous program in G-8 nations that provide indirect support to conduct R&D in Canada. Any size business can make a claim and there is no cap.
  • Canadian companies can recover up to 68% of the R&D costs.
  • The SR&ED program accounts for about 25% of federal R&D grants and tax credits.
  • The SR&ED program provide about $3.5billion in tax credits to 24,000 claimants every year.
  • About 70% of the claimants are small and medium size business who are eligible for refundable tax credits.

Who is eligible?

Contrary to popular myth, this credit is not limited to companies in the high-tech, biotech and pharmaceutical sectors. In recent years, there has been significant clarification to the SR&ED tax code which establishes more lenient interpretation of what qualifies. Today, the SR&ED Tax Credit can apply to a variety of areas including manufacturing, engineering, automation and controls, metal fabrication, machining, food manufacturing and information technology.

Does your company...

  • manufacture products?
  • develop new, improved or more reliable products/processes/formulas?
  • develop prototypes and models including computer generated models?
  • design tools, jigs, molds and dies?
  • develop or apply for patents?
  • conduct testing of new concepts and technology?
  • develop new technology?
  • attempt using new materials?
  • add new equipment?
  • develop or improve production/manufacturing process?
  • develop software or hardware?
  • automate/streamline internal processes?

If your company involved in any of the above mentioned activities, you may be eligible for SR&ED Tax Credit.

What Expenditures Are Eligible?

expenditure

All project-related expenditures can be submitted. These typically include: salaries and wages, materials destroyed or used to build prototypes, work subcontracted to other Canadian taxpayers.

How Much Can I Recover?

how much recover

Canadian taxpayers can recover up to 68% of their expenditures, depending on their location (within Canada), ownership (Canadian vs. Foreign, Private vs. Public), taxable income (in the prior fiscal year), and size (amount of capital employed).

How Long Will It Take To Process Our Claim?

time consume

Canada Revenue Agency (CRA) commits to processing refundable claims which are filed jointly with the year-end T2 within 120 days. Non-refundable claims are processed within 360 days.

Amended refundable and non-refundable claims are processed within 240 and 360 days respectively. In our experience, most claims are approved within 2 to 6 months.

Is My Business Eligible?

my bus eligible

Many of our current clients did not initially consider any of their work to be R&D. This is a common misconception. Through the SR&ED program common, everyday activities on the shop floor or in an industrial setting are eligible - as defined by the CRA guidelines. Additionally, work does not have to represent a breakthrough or a 'quantum leap' in your industry.

Small incremental improvements and advancement in the design or formulation, materials, quality, durability, or energy efficiency of your product or process are sufficient.

Reliance Consulting can conduct a free-of-charge assessment to determine whether your specific work qualifies for the SR&ED program.

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