If you are in the business of scientific research and technological innovations, you know firsthand how acquiring funding to sustain your work can be quite a challenge, especially if you are yet to hit a big break and debut a trendy new invention, or revolutionary process that changes production of common goods. The federal government of Canada understands this struggle, so to support your work, Scientific Research and Experimental Development (SR&ED) incentives in the form of tax credits are made available to budding inventors, researchers, and startup owners.
With the help of SR&ED consultants in Toronto, Calgary, or Edmonton, you can gain learn how the credits work, and how these can aid in better funding future innovations.
Interested in applying for the SR&ED Program, but require more information as to how exactly the credits work according to your type of business? The SR&ED consultants at CI Solution break down how the credits work, here:
How SR&ED Incentives Work
Canadian-Controlled Private Corporations
If your company is a Canadian-controlled private corporation, the SR&ED Program allows you to receive a refundable tax credit at a rate of up to 35% from the federal government. SR&ED consultants from CI Solutions in the area of your business, such as Toronto, Calgary or Edmonton, can review your finances and operations in the past year to help determine your eligibility according to the criteria.
For instance, if in the year prior to the one you are claiming for SR&ED, you reported less than $400,000 in taxable income and less than $10M in taxable capital employed in Canada among all associated companies, your company can claim this tax credit as a payment that can be used towards your business’ bottom line.
Sole Proprietorships and Foreign-Owned Businesses
If you are an individual owner of a business performing scientific research and development activities, or you own a publicly-traded foreign business operating in Canada, you are eligible for a 20% federal SR&ED tax credit. While these credits are not refundable in cash, these credits are eligible to be carried forward for up to 20 years, or back 3 years. This helps reduce the company’s federal tax liability dollar for dollar. With the help of SR&ED consultants in your area of business in Calgary, Edmonton or Toronto, you can screen your eligibility and process your claim for SR&ED tax credits.
Timeline for Claiming SR&ED Credits
To be eligible for claiming SR&ED incentives, you must file a claim within 18 months of the close of the fiscal year you are claiming incentives for. This timeline is very important to determine as you cannot claim any SR&ED tax credits for a particular year if you missed the filing deadline.
SR&ED consultants in Calgary, Edmonton or Toronto can help ensure that you are on schedule for claiming, in addition to preparing your detailed project description of the qualifying activities your company undertook. The CRA will then use this report to determine whether or not your company carried out sufficient necessary activities to qualify for the SR&ED Program.