SR&ED (Scientific Research & Experimental Development)
FundTact understands how extensive R&D can place a financial and labour strain on an emerging start-up or even an existing business. However, Canada offers a generous program that rewards product-based technology companies that conduct research and development (R&D) within product development, processes or technology. This program allows companies to claim Scientific Research and Experimental Development tax credits – otherwise known as SR&ED based on R&D costs incurred through salaries/wages, materials, and subcontractor invoices. The SR&ED Canadian government incentive program pays in excess of $4 Billion (CDN) to over 20,000 eligible claimants every year.
The SR&ED Eligibility Criteria is as follows:
Technological Advancement – furthered technical knowledge
Technological Uncertainty – faced technical challenges or uncertainties
Technical Content (Systematic Investigation) – went through an iterative process to try and overcome those challenges or uncertainties
Although the eligibility criteria is the foundation of the SR&ED program, eligible activities conducted by companies appear in different forms, which is why many companies are unaware and miss out on their tax refund/credit —their own hard earned money.
Good indicators of eligible activity include experimentation, testing, modifications and/or iteration within product development, processes, and/or technology.
The SR&ED program provides the opportunity for companies to get up to 68% of salary expenses back on eligible R&D projects from the Canada Revenue Agency (CRA). The two charts below provide a refund amount example both for a Canadian Controlled Private Corporation (CCPC) entity and a non-CCPC (foreign-owned company).
Contact FundTact for assessment and estimation of your refund and/or credit.