What do I need to qualify?
SR&ED is not only for the science buffs. You can claim SR&ED for many different research and development costs.
SR&ED eligible expenses that can be claimed are typically SR&ED wages, contractors and materials that are consumed or transformed within the research.
Provinces in Canada also have different tax credits that can be utilized in coordination with SR&ED at the federal level. This can lead to up to 60% of your research costs refunded back to your company at the end of each fiscal year.
Time and evidence tracking could make or break your claim. It isn’t a first priority for any regular business owner. CRA looks for more activity-based time tracking methods.
What is the Science, Research, & Experimental Development Program (SR&ED)?
Science Research and Experimental Development (SR&ED) pronounced (SHRED) is a federal tax incentive program in Canada. The Canadian government supports innovation in Canada by providing a tax incentive for innovative work performed in Canada. Research and Development work in Canada does not guarantee SR&ED eligibility as CRA has their own guidelines in relation to what constitutes SR&ED work. SR&ED is claimed at the end of each fiscal year and is administered by CRA.
As defined by CRA, this means there is a systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis and that is:
(a) basic research
(b) applied research
(c) experimental development
The method to establish this involves answering the following questions:
Was there a scientific or a technological uncertainty?
Did the effort involve formulating hypotheses specifically aimed at reducing or eliminating that uncertainty?
Was the overall approach adopted consistent with a systematic investigation or search, including formulating and testing the hypotheses by means of experiment or analysis?
Was the overall approach undertaken for the purpose of achieving a scientific or a technological advancement?
Was a record of the hypotheses tested and the results kept as the work progressed?
At Colum Consultants we can help you better understand if you meet the requirements for SR&ED as set out by CRA.