The Federal Government of Canada recognizes that undertaking scientific research and experimental activities to develop products and services that can potentially improve the lives of many Canadians is a public service. Due to this, Scientific Research and Experimental Development (SR&ED) incentives can be claimed by researchers and companies, which can accrue towards funding for future projects. But do you know exactly what activities and expenditures can qualify? With the help of SR&ED consultants in Calgary, Edmonton, or Toronto, you can correctly identify these qualifying measures, and file a stronger claim.

Qualifying Expenditures for SR&ED Incentives

With the help of SR&ED consultants, you can identify if any expenditures your company in Calgary, Edmonton, or Toronto made in the past year count towards scientific research or experimental development that the SR&ED Program rewards.

Expenditures that qualify for SR&ED incentives include:

• Salaries or wages of staff performing research and development activities, even some of the work done outside of Canada;
• Cost of materials used in production, research and experiments, even including scrap created during experiments and test runs;
• New equipment purchased solely to enable and support SR&ED activities;
• Cost of lease incurred solely for the performance of SR&ED activities, not including rent or building leases;
• Third-party payments for work done in support of said research and development projects; and
• Scrap generated during experiments and tests.

Qualifying Activities for SR&ED Incentives

As your company incurs expenses towards scientific research and development initiatives, it is also important to ensure that these were spent towards activities that indeed qualify for SR&ED incentives. To ensure your qualification, it helps to review the activities you undertook in the past year with SR&ED consultants in your area of operation, such as Calgary, Edmonton, or Toronto.

Based on the SR&ED guidelines, activities that qualify for incentives are basically work undertaken for the purpose of achieving technological advantage. This includes creating, or improving existing devices, materials, processes, or products. You don’t even have to achieve a breakthrough to qualify, as even incremental improvements to current technology, materials, products, and process can be eligible for SR&ED incentives.

Eligible SR&ED activities may include experimental development, basic research, and applied research:

• Experimental development pertains to work performed to achieve advancements in technology, such as creating new, or improving on existing materials, products, or processes, even including incremental improvements, such as in the design or engineering setting.
• Basic research includes work performed to advance scientific knowledge, not particularly for a special practical application, such as in universities or laboratories.
• Applied research pertains to work performed to advance scientific knowledge, this time, with a practical application as a goal.

To check if the work you performed falls under any of the three eligible activities, it helps to screen your projects with SR&ED consultants.

When preparing your application, it also helps to take note of activities that are not eligible for SR&ED incentives. Your SR&ED consultants will take the following activities off the application you submit:

• Commercial production of a new or improved material, device, or product; or the commercial use of a new or improved process;
• Quality control testing;
• Development solely based on design or routine engineering adjustments;
• Social science, humanities, and market research and promotions;
• Style changes;
• Routine data collection; and
• Prospecting or producing minerals, petroleum, or natural gas.

Check your eligibility for SR&ED tax refunds before filing your claim. Increase your chances of approval by submitting a professionally-prepared claim with our SR&ED consultants in Calgary, Edmonton, and Toronto. Call us at (416) 477-5569 (Toronto), (403) 744-0143  (Calgary), or (780) 628-6718 (Edmonton) today to speak with one of our consultants.