What is SR&ED?
SR&ED (Scientific Research & Experimental Development) is an incentive program by Canadian government that refunds companies involved in Research and Development (R&D).
The SR&ED program is available to companies involved in Research and Development (R&D). The eligible expenditures include your time, employees' labour, materials and equipment. SR&ED money is given as a refund for the work already done.
If you are interested in government incentives for current or future work, have a look at this list: Other Canadian government financial incentives for businesses
If you are interested in Ontario Digital Media tax credit (OIDMTC), go here: OIDMTC.
Canadian-controlled private corporations (CCPC) that spend money on creating or modifying products or processes through experimenting. Any company that deals with technology (software and hardware development, machinery, printing etc.) may qualify. If you created an entirely new industrial process or improved an existing one, if you took a database driver and rewrote it so its performance doubled, if you came up with a fuzzy logic algorithm to facilitate scheduling - all of this may be eligible.
Innovation, uncertainties you overcame, and technological advancement are the criteria for eligibility.
Even failed experiments may qualify.
Non-Canadian owned companies also qualify, if they pay salary in Canada. Canadian public companies and non-incorporated entities are eligible too, but they are entitled to smaller refunds.
Amounts and deadlines
The refund is calculated based on the amount of salary paid in the fiscal year related to the qualified project.
| Maximum refundable amount | ||
| Expenditure | Canadian-controlled private corporations | Canadian public companies and non-incorporated companies (solo proprietorships and partnerships) |
| Labour (salary) | 68.5% | 33% |
| Materials and subcontracts | 41.5% | 20% |
The projects do not have to be completed: if you did part of the work in 2007 and completed the project in 2008, you will claim the 2007 part with your tax return of 2007 and the rest with your tax return of 2008.
What if I already submitted my tax return for a past fiscal year? Is it too late to claim SR&ED?
You may submit your SR&ED claim for a particular fiscal year within 18 months after the end of that fiscal year. If you have already submitted your taxes, you may submit the SR&ED claim later, as a part of the tax amendment, as long as you are within the 18-months window.
What expenses qualify?
Employees' wages, subcontracts and owner’s labour represent the bulk of all claim expenses.
Materials and capital expenses are also allowed if they are used only for eligible projects, up to a certain cap.
How will I help you?
I will prepare a SRED claim for you and do everything that is in my power so the claim succeeds. This includes:
Pre-screening and projects identification
Preparation of a detailed technical report on the work you did and your accomplishments
Preparation of all tax schedules and accounting reports detailing the costs associated with the project.
Dealing with SR&ED financial and technical reviewers.
We charge a share of a successful claim amount. We do not charge any upfront fees or retainers. If the claim does not qualify, there is no fee.
Contact me at tania@sred4you.com for further information.
Other Canadian government financial incentives for businesses
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