As 2017 comes to a close, you want to make sure your taxed income includes the proper SR&ED deductions you may be eligible for. Your business’s contributions to Toronto’s top innovative industries makes you a valuable asset to Canada’s economy. So, if your research has created a new program, built on an existing product, or advanced a scientific process, you qualify for an income tax refund.
Our tax consultants understand that making your claim can be quite time consuming if you aren’t sure where to start. For this reason, we like to highlight the key steps that need to be taken in order to prepare for your SR&ED claim before the year ends. An experienced SR&ED firm accelerates the filing process, especially during time sensitive seasons, by doing the following:
Calculating SR&ED Expenditure and Investment Tax Credit
Sorting through the documents that show how much was spent on SR&ED efforts can be difficult when you don’t know what you’re looking for. Our consultants look for the following records when claiming expenditure:
- SR&ED salary or wages
- Money spent on materials for SR&ED
- Contract expenditures for SR&ED performed by a claimant
- SR&ED lease expenditures
- SR&ED overhead and other expenditures
- Third-party payments
- SR&ED capital expenditures
Once all expenditures are identified, there are two methods our consultants will use to calculate your tax credit, the traditional method and the proxy method. The traditional method claims all overhead expenditure during the year, while the proxy method calculates a substitute amount for overhead expenditure. Once a total is reached, we have an exact amount to document and claim.
Handling Prescribed Forms
The Scientific Research and Experimental Development Expenditures Claim must be filled out with your income tax return, along with an Investment Tax Credit form for your corporation or for yourself. Our consultants can guide you along each step, showing you how the information corresponds with the amount you are claiming. Once these mandatory forms are completed, we can move on to collecting proof of your SR&ED contributions.
Identifying Supporting Documentation
During the review of your SR&ED claim, you will be asked for documented evidence. So, it’s best to have all of these files organized and kept in one place for when they are needed. Our consultants get to know your business and how its operated in the past year to make sure all areas of spending proof can be pulled from. We look for the following types of documentation:
- Project planning documents
- Experiment Designs and plans
- Technical drawings
- Project records and lab notes
- Trial run records
- Progress reports
- Protocols, data, results, analysis and conclusive documentation
- Media: photos, video
- Purchase invoices and proof of payment
Once this documentation is gathered with your consultant, they will carry out the filing process, expedite your claim, and resolve any concerns during review.
Now that the year has almost come to a close, its best to get your SR&ED claim processed by a professional to ensure you get it filed before the new business year. Financially benefiting from your innovation only allows bigger opportunities for advancement in years to come.