With tax season upon us, small business owners are likely working hard to prepare their corporate taxes and SR&ED claims. Designed to support and encourage businesses that are working to advance and innovate their respective industries through research and development efforts, the SR&ED program is one of the largest government funded tax incentive programs in Canada. In fact, after business owners receive a complimentary SR&ED consult from our team at CI Solutions, many discover that they are eligible to receive generous returns from the government–returns that cover up to 41.5% of their business’ annual expenses.
Unfortunately though, for small business owners who are unfamiliar with the process of claiming SR&ED, the guidelines can appear intimidating and perplexing, resulting in dismissing the idea of filing a claim altogether. Luckily at CI Solutions, our team of SR&ED consultants have the knowledge and experience to help small businesses like yours file a successful SR&ED claim. Familiar with all the in-and-outs of the program, we shared our best tax season tips for small businesses claiming SR&ED below:
Gather All Supporting Documentation Ahead of Time
When claiming SR&ED tax credits, the CRA will request for official documentation or evidence that supports your facility’s eligible research and development efforts over the past year. As a result, we recommend staying organized and gathering all your supporting documentation in advance. Not only should these documents all be dated, it must also tie back to the activities described in your claim.
As the business owner, you should also be able to ascertain exactly what, when and by whom the work was done by. If possible, be sure to also account for all expenditures that occured for each individual project in your documentation. Whether these expenses went towards subcontractors or materials, every penny must be accounted for in your documentation.
In the end, the CRA should be able to distinguish a clear connection between an expense and the research and development project using the evidence you submitted. Examples of technical and financial support evidence that should be submitted include:
- 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
Know What Expenses Can or Can Not Be Claimed
Avoid having your claim dismissed by understanding the expenses that are and are not eligible for SR&ED tax credits. Expenses that are eligible for a SR&ED tax credit refund include expenses used towards:
- Direct Labour – wages for staff directly involved in experimentation or technical support staff
- Contractors, Subcontractors and Third-Party Organizations
- Overhead Costs – expenses for utilities, telecommunications, supplies, training expenses, travel, etc.
- Materials Transformed or Consumed – including lab equipment, computer hardware, tools, and capital equipment
Hire SR&ED Consultants To Help
Not sure how to proceed with claiming your SR&ED tax credits in Edmonton? Our professional SR&ED consultants at CI Solutions offer tailored SR&ED consulting services to help. With years of experience consulting on, preparing, and processing SR&ED claims for small businesses like yours, our team will ensure that your business in Edmonton receives the best return possible.
Between meeting with you to screen your projects & eligibility, to helping your small business prepare a comprehensive technical report detailing your experimental activity, and submitting your claim, our SR&ED consultants will work with you every step along the way. Reap the benefits of claiming SR&ED tax credits for your small business with little to no effort on your part when you hire experienced SR&ED consultants like ours at CI Solutions.