SR&ED PROGRAM
Scientific Research and Experimental Development (commonly referred to as SR&ED) is a reimbursement program designed to help Canadian businesses undertake technological risks and foster innovation. It’s important to note that even thou SR&ED is often referred to as a tax credit, majority of claimants qualify to receive a cash refund, rather than a tax credit.
SR&ED is not a new program, with its roots dating back to 1944. The program has evolved drastically over the decades and substantial new changes are implemented every few years. Currently CRA administers the program. SR&ED is a complex program with many grey areas, hence why most claimants rely on the expertise of SR&ED consultants to prepare and oversee their SR&ED claims.
Companies that are eligible to receive SR&ED credits typically improve existing products/processes or develop new products/processes. SR&ED eligible work normally arises when standard industry solutions are not entirely successful in any given technological endeavour. The presence of technological experimentation is one of the key criteria of SR&ED-eligible work. Whether the result of the experimentation was a success or a failure is irrelevant, however failures often indicate a higher likelihood true technological uncertainty took place. Technological challenges must have been present, and experimentation must have taken place to overcome the challenges. SR&ED eligibility is determined on a case-by-case basis and requires an analysis of company’s technological challenges, experimentation process and financials.
Canadian companies are eligible to receive up to 64% of salaries, 33% of contracted labour and 42% of material expenses invested into an SR&ED-eligible project. The rate of reimbursement varies by province, company’s CCPC status and other variables. SR&ED is claimed on annual basis and is typically filed with company’s T2 filing. Eligible SR&ED work in any given fiscal year can be claimed up to 18 months after the end of that fiscal year. Therefore, in certain situations, companies can claim refunds up 30 months retroactively. Companies can continue to claim SR&ED year after year, so long as eligible SR&ED work continues.
To claim SR&ED tax credits, a series of claim forms must be completed and submitted. Claim forms include detailed technical narratives of the projects as well as many financial forms. Claims go through rigorous reviews and it is crucial to have a complete understanding of the program to receive refunds quickly and avoid audits. Many of our clients receive cash refunds within just weeks of submitting their claims.
If you believe your business could be eligible to claim SR&ED, talk to us today to find out if you are eligible and the monetary value of a potential refund.
Our SR&ED Service Expertise
At Economic Investments Canada, we pride ourselves on our 50+ years of combined SR&ED experience. Our SR&ED team members possess strong technical experience and expertise in Manufacturing, Agriculture, IT and other key industries. Our financial experts help our clients maximize their SR&ED returns while adhering to strict & rapidly evolving SR&ED regulations.
We provide complete SR&ED support to our clients at no extra charge including technical project writing, documentation gathering, financial forms preparation and in the event of an SR&ED audit, full audit support. We provide eligibility analysis and program adherence analysis at no cost. We educate our clients on best SR&ED practices to ensure long-term success of future SR&ED claims. Confidentiality is of utmost importance to us and our clients. We maintain highest level of security across our operations to ensure all client information is held in the strict confidentiality. We have established a strong reputation for success in the industry.