This is a Canadian program that provides the support needed inform of tax credits or refunds to partnerships, individuals, and corporations conducting experimental development, and scientific research. It is a single large source of the federal government support that is designed to encourage development and research in Canada. Over 20,000 claimants have benefitted from the$3 billion tax incentives that it provides.
Objective of SR&ED
- Deliver the tax incentives in a consistent, predictable, and timely manner, and at the same time encouraging business to prepare their claims in compliance with the policies, procedures, and tax laws.
Criteria of eligibility for your project for SR&ED
- Technological uncertainty. Faced with technological challenges.
- Technological advancement. Increase the technical base from where it was at the beginning of the systematic investigation.
- Technical content. It must have gone through an iterative process.
- It has to be able to generate new scientific information.
- There has to be a systematic investigation carried out by analysis or experiment.
How SRED can benefit your company
It provides financial incentives by:
- Bettering the position of your company for future SR&ED projects.
- Funding the technological, and scientific advances for competitive purposes.
Businesses eligible
Businesses involved in applied or basic research, and those advancing in technology to develop the new devices, products, materials, and devices
They are categorized into; proprietorships, private corporations controlled by Canada, and other corporations.
Expenditures incurred for SR&ED to claim
- Materials
- Contracts of the program
- Salaries and wages
- Overhead
- Third party payments
- Lease cost of equipment
How to determine the expenditure
Use the two methods;
- Traditional method. In this method, you claim all the SRED expenditures incurred during the year. Identify the overhead costs.
- Proxy method. In this, you calculate the substitute amount for overhead expenditures by using a formula.
How to make a claim
File an income tax return along with the prescribed forms .
When to file a claim.
When applying for SRED tax incentives, the prescribed forms have to be filed by your reporting deadline which is 18 months from end of tax year you incurred the expenditures.
What happens after you send your claim?
The CRA( Canada Revenue Agency) determines whether it can be processed. It will reduce the taxes payable if the filed claim has been processed. If not, the CRA(Canada Revenue Agency) will request for more information so as to review your claim.
Items when considering the preparation, performing, and defending of the claims
- Dated documentation. It’s availability makes the review run smoothly.
- Timesheets. Key when claiming time for employees.
- Founder payments.
- Missed forms.
- Collaboration.
- Cost overruns.
- Prepare for CRA.( Canada Revenue Agency)
Services offered by SRED program
- Pre-Claim Consultation.
- First-Time Claimant Advisory Service.
- Pre-Claim Review.
- Information of the Public, and Industry-Specific Seminars.