Here’s what our clients and prospective clients are asking us:
Who is eligible?
The most fundamental determination of eligibility is understanding what type of company may participate in the SR&ED program. While program requirements do not restrict participants by industry, some additional consideration may be helpful when preparing claims for some of the less common industry players and company profiles. We will discuss company and industry profiles that have been more successful than others, and will provide helpful tips and recommendations on representing your company appropriately in an SR&ED claim.
Who can file an SR&ED claim and what are the chances they will qualify for some sort of benefit?
Any Canadian legal entity required to complete a T1 or T2 tax filing is eligible to submit an SR&ED claim if it is involved in efforts to innovate or enhance or integrate with an existing product or process. It is estimated that only 15% of eligible organizations actually file a claim.
What are the eligibility criteria?
While there are definitions of “research and development” outside the scope of the SR&ED Program, only work that meets the previous definition and the following three criteria qualifies as SR&ED:
Scientific or technological advancement – The work must generate information that advances the understanding of scientific relations or technologies.
Scientific or technological uncertainty – Whether a given result or objective can be achieved, or how to achieve it, is unknown or cannot be determined based on generally available scientific or technological knowledge or experience.
Scientific and technical content – There must be evidence that qualified personnel with relevant experience in science, technology, or engineering have conducted a systematic investigation through experiment or analysis.
What are the applicable industries?
While there is no explicit criteria that identifies specific industries, the most common to participate include:
Agricultural Manufacturing
Fabrication Shops
Machine Shops
Biotech
Biofuels
IT Companies
Bio-Product Companies
Neutracutical Company
Oil & Gas Technologies
What is the benefit, and can it be estimated prior to preparing the claim?
Yes, an SR&ED claim can be estimated. And once a claim has been processed and approved by CRA (Canada Revenue Agency), the applicant will receive a tax credit, usually in the form of cash.
Is there a deadline to file an SR&ED claim?
An SR&ED claim must be filed within 18 months of an organization’s fiscal year end. This means that an organization may also be able to file a return for the previous year to capture additional eligible amounts.
What is eligible?
Eligibility criteria and boundaries are commonly misunderstood and misreported, resulting in time and effort intensive CRA reviews. Using terminology from official program definitions, work that involves scientific or technological advancement or scientific or technological uncertainty may qualify, however, consideration must also be given to several other factors including source jurisdictions, experimental development components, applied research, and support functions. We will simplify these eligibility components to enable you to identify areas of potential recovery within your company.
Is my product or technological advancement eligible?
To be eligible for SR&ED incentives, work must meet the legislative definition of “scientific research and experimental development” and must fall into one of the following categories:
Experimental development – This is the work done to achieve technological advancement to create or improve new materials, devices, products, or processes. Most SR&ED claims involve experimental development.
Applied research – This is work done to advance scientific knowledge with a specific practical application in view.
Basic research – This is work done to advance scientific knowledge without a specific practical application in view.
Support work – This is work that directly supports and is commensurate with the needs of experimental development, applied research, and basic research. This includes only the following 8 specific types of work: engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, and psychological research.
Only SR&ED done in Canada qualifies under the program. When work is carried on both inside and outside Canada, only expenditures for work done in Canada that meets the definition of SR&ED will be eligible for the incentives.
What if the organization has no taxable income or already receives grants or other sources of funding?
The SR&ED claim amount is mainly derived from eligible expenses and typically excludes grants and other government funding amounts. The resulting tax credit comes in the form of cash or a tax credit, or a combination or both. In any event, there is a positive cash effect.
Can I prepare an SR&ED claim without using an SR&ED consultant?
Advance-Tek Consulting realizes that you are extremely busy running your business… This is our business! It is our job to ensure your claim is prepared with the utmost quality & accuracy.
Available human resources are at an all time high demand. You and your people are stretched to the max already. Trying to learn the “ins and outs” of the program while operating efficiently can be extremely challenging and ultimately quite costly. Leave the work to us and we’ll ensure that your SR&ED claim is done properly, submitted on time and your refund is fully maximized. After all – it’s your money!
Can the claim be audited or denied by CRA?
Yes. This is why it is so important to get it right the first time. Advance-Tek demonstrates exhaustive diligence in identifying eligible expenses and in preparing claims. This completeness and attention to detail helps to ensure the claim’s integrity and validity.