The Scientific Research and Experimental Development (SR&ED) is a nation-wide tax incentive initiative devised by the Canada Revenue Agency (CRA). SR&ED firms, namely those who are found to be eligible for these incentives, enjoy considerable tax reliefs. In Canada, the SRED program is the biggest source of federal government funding for R&D, with over 20,000 claimants receiving access to 3 billion dollars annually!
The program’s objective is to incentivize businesses, partnerships and individuals, (size or sector regardless), to engage in scientific research and experimental development activities in Canada. Specifically, those that could usher in significant improvements in their fields. The focal point is to coax businesses to make claims that are compliant with the CRA’s established policies as well as with Canada‘s tax laws.
A common misconception of this program is that only companies, with top-of-the-line laboratories, involved in R&D will qualify for this tax credit. In reality, as per the program’s stipulations, these R&D activities can just as easily be integrated into your daily business operations.
To be eligible to apply for these incentives and become an SR&ED company, there are certain parameters to be met. A Canadian-controlled Private Corporation (CCPC) can enjoy 35% in Investment Tax Credits (ITC) up to the first 3 million dollars of the qualified expenses for SRED that is conducted in Canada, as well as 20% on excess amounts. Other Canadian proprietorships, corporations, trusts and partnerships can enjoy 20% in ITCs of the qualified expenses for SRED conducted in Canada.
Even if your business does not turn a profit, there isn’t any cause for concern. Bear in mind that the SR&ED program offers refundable tax credits. In essence, you will receive the appropriate refund in cash even if your bottom line doesn’t reflect a profit.
The nature of the R&D activities that meet this program’s criteria fall under four broad categories:
– Activities that are aligned with computer programming, mathematical analysis, operations research, engineering, design, testing, data collection or psychological research. This is only if said activities support the eligible basic R&D.
– Experimental development that is aimed at technological progress. This can take the form of creating new devices, products, materials or processes or improving upon those that exist.
– Basic research for the advancement of scientific knowledge, without having a clear-cut practical application in mind.
– Applied research for the advancement of scientific knowledge, with having a clear-cut practical application in mind.
Through the program, tax credits are provided in a predictable, timely and periodic manner. The CRA is fully dedicated to making sure that SR&ED tax incentives are easily accessible, and that all businesses have knowledge of them.
The major benefits that this program engenders are two-pronged: 1. You are allowed to deduct SRED expenses from your income. 2. The SR&ED ITC (Income Tax Credit) lets you reduce the income tax payable as stipulated under Part 1 of the ITC, with the remaining ITC being refundable in certain cases. Essentially, the business owner operating in Canada may deduct expenditures as stated by the Act, while computing their business income for the year.
Moreover, the CRA is adamant about maintaining the fiscal soundness of the program, come what may. It’s primary aim? Making doubly sure that the legislations are justly and accurately applied so as to allow you, the claimant, to have access to the entitled amount.
The process of identifying, developing and processing SR&ED claims for your business so as to become eligible to access federal and provincial tax credits/refunds is challenging. Getting it right the first time, rather than having to appeal to the CRA to reverse its decision of a denied claim, is in your best interests. Recruiting the services of SR&ED specialists can fetch you those results the first time around.
You could always seek assistance from your in-house finance team while applying for a claim, however, recruiting experts will help streamline the process and elevate the likelihood of you receiving SRED funds.
CI Solutions is an SRED consulting company, operated by a team of highly proficient engineers. In today’s cutthroat economy, the challenges to grow your business are wide as they are varied. CI Solutions aids businesses of all sizes by leveraging our expertise to help you identify projects that qualify for SR&ED incentives, compute associated costs and grant fund eligibility.
We are committed to harnessing our extensive knowledge in chemistry, IT, electronics and mechanical engineering to help your company have access to quality SRED ITC claims.
Our experts oversee your SR&ED application from start to finish, whether that involves correctly documenting the work for reporting SR&ED or providing ongoing advice and support.
As SRED consultants, we deliver quality support through:
– A cost-free, obligation-free meeting to identify SRED eligible projects that you might be missing out on right now.
– An in-depth screening of the projects to test their eligibility.
– Drafting a detailed and exhaustive technical report that tracks all your experimental R&D work.
– Drafting accounting reports and tax schedules to estimate project expenditures.
– Submitting your SRED claim to the CRA.
– Providing our expertise when intervening in SR&ED technical and financial reviews.
– Continuous and on-demand SRED advice and support.
We’re qualified SRED consultants who believe that our job is only complete when you see the results you desire. No commitment is required from your side as we will review your business for free. CI Solutions does not collect any retainers or front-end fees. Simply put, we only get paid when you do! We urge you to take full advantage of our free consultation today to identify your SR&ED opportunities!
All this information makes the application process seem tedious, doesn’t it? Don’t despair! We promise you that the tax credits and amazing ITC rates make the effort of preparing a claim worthwhile!
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