Are you a first-time claimant to SR&ED tax incentives? Even if you’re not, the confusion surrounding the eligibility for the SR&ED program is understandable, because every project is different. It’s important to know what makes a project qualified to avail the benefits of this program and how SR&ED consultants can assist in your endeavours to file a claim in Toronto successfully.
What types of businesses are eligible?
Any company which operates and performs research and development activities in Canada can consider applying for the SR&ED program. Generally, the businesses which are eligible for incentives under this program are classified into three groups: CCPCs (Canadian-controlled private corporations), other corporations (in this case, the ITC rate is 20 percent of current and capital SR&ED expenditures; non-refundable), and trusts, proprietorships and partnerships (the ITC is 20 percent of qualified current and capital SR&ED expenditures; you may get refund on 40 percent of balance of ITC earned in the tax year.
The distinction between a company project and SR&ED project
Knowing the difference between the two can make a huge difference when it comes to the adequate investment of time, efforts and money. A company project refers to endeavours by a business to achieve a certain impact on its progress, such as expanding or developing new facilities, upgrading processes, introducing new products, and modifying certain business practices. In a nutshell, a company project has a commercial objective. To the contrary, an SR&ED project is more focused on advancing the scientific knowledge or accomplishing technological innovation for the common good.
An SR&ED project, more often than not, is undertaken as a subset of a company project. This means, not all the work done in your project will necessarily come within the scope of SR&ED. It is also likely that your company has more than one SR&ED projects – some entailing experimental development, whereas others involving applied research or basic research. In certain areas, even the support work which aligns with the requirements of basic or applied research and experimental development may meet the eligibility criteria of SR&ED grants, such as engineering, data collection, computer programming, psychological research, mathematical analysis, testing, and operations research.
Please note that not all expenditures can be claimed after your project has been deemed to be eligible for the program. Some of the qualified expenditures are labour, overhead, materials, lease cost of equipment, third-party payments and subcontracting fees.
For detailed information around this, you can always look for professional SR&ED consultants in Toronto like CI Solutions who are dedicated to making the claiming process easier and smooth through step-by-step assistance. From initial discussions to the filing of claims, we are aimed at helping you process the SR&ED claims in a streamlined manner so that you can easily procure refunds and the tax credit for which you are entitled to.