What's SR&ED?

By John Clarke April 8, 2017 SR&ED in Canada No comments yet

Scientific Research and Experimental Development (SR&ED) is a federal government program that gives cash refunds and/or tax credits to businesses doing research and development in Canada.

SR&ED encourages research activities to create or improve technological advances in products & processes.

As a Canadian company, how can SR&ED benefit us?

Your business can receive a refund of over 40% of eligible research and development (R&D) dollars (depending on the nature of your research expenses). The refund is in the form of cash back, and Investment Tax Credits (ITC) to offset revenues. Cash refunds and ITC can be applied to any area of your business

What kind of projects are eligible for the SR&ED program?

To be eligible for the SR&ED program an R&D project must advance scientific and/or technological knowledge, products and/or processes. Eligible projects include:
  • experimental development to create or improve new products or processes
  • applied or theoretical research to advance scientific knowledge
  • work necessary in direct support of the above
  • What expenditures qualify for SR&ED?

Qualifying expenditures may include:
  • labour (salary or contract)
  • materials
  • overhead costs
  • third party payments (e.g. university research contract)
  • (capital and lease costs no longer qualify)

How do I apply for SR&ED tax credits?

You must submit your SR&ED claim to the Canada Revenue Agency (CRA) within 18 months of your fiscal year-end. An SR&ED claim consists of:
  • CRA and provincial government forms for financial data
  • a technical writeup of each R&D project you are claiming for the tax year. The writeup must document:
  • scientific and/or technological objectives of each R&D project
  • scientific and/or technological advancements from your R&D
  • scientific and/or technological challenges with your R&D
  • the work done to overcome your challenges

How to apply for SR&ED tax credits?

I do the work & look after all details for you:
  • interview your technical staff
  • identify your R&D project(s) 
  • collect your financial & technical data
  • compose technical writeups
  • compile the forms and submit your SR&ED claim to the Canada Revenue Agency

To learn more about SR&ED or for a free consultation to discuss whether you may qualify, see the Contact page for details.

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