Dealing with technology? You might be eligible for government funding

SR&ED (Scientific Research & Experimental Development) is an incentive program by the Canadian government that refunds companies involved in Research and Development (R&D). (See the information about the program on the CRA website.) Canadian companies that spend money on creating or modifying products or processes through experimenting are eligible for SR&ED. 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.
The SR&ED program is available to companies involved in Research and Development (R&D). Eligible expenditures include your time, employee and subcontractors labour, materials and equipment. SR&ED money is given as a refund for work already done.
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Moving Beyond “Claim Prep”


This article is by Bruce Madole who kindly agreed to provide some interesting materials related to SR&ED.

As SR&ED Consultants, we owe a duty to our clients to help them develop new capabilities and acquire new knowledge.  I think we need to move beyond simple claim preparation into “process development” and even “training”. Personally, I take on that obligation as a fundamental part of the consultant’s role.
In case you hadn’t noticed, the SR&ED program has become a highly competitive industry. There’s a bit of a “gold rush” mentality about some of this, as people and companies discover the facts about the world’s best R&D tax Incentive program. Quite a few companies promise a “limited impact” interaction with the client – a specified or typical number of hours (per project) spent interviewing the technical staff of a claimant’s company. (Clearly, they’re not promising “true love” in this model of transaction.)
While a devotion to minimal impact and “only the necessary” interaction may yield a quick turnaround on the claim preparation, it offers nothing (or very little) in the area of value-added services like process development, for example.  The client may claim successfully without learning very much about how and why that claim succeeded, or how to leverage that experience for future successes or better claims in the future. Where’s the residue of knowledge gained?
There may well be some clients who really, really don’t want to be bothered about learning to maximize their SR&ED opportunities, and who would be content to pay someone else, indefinitely, for the support of an annual claims process they have no desire to understand, augment or support. Particularly when the use of a contingency fee limits their financial risk, and competitive pressures keep eroding contingency margins.  Presumably, such clients are doing very well, and are not greatly interested in pursuing strategic opportunities for bottom-line gains – these clients don’t just think they’re winning, they are confident they’ve already won.  They’ve mastered their marketplace, and want nothing more from the SR&ED program than a convenient, low-effort tax break.
Other clients are more hungry, more alert to the impact of their profit margins, and more willing to seek out and develop internal capabilities and processes if the return goes straight to the bottom line.  They’re not necessarily grateful to a consultant who proposes to keep them perpetually dependent on consulting services, when they could be learning things that will, at minimum, help them to take better advantage of those services.  Sure, they may eventually stop needing me and “grow their own wings”, taking on the process of identifying and claiming SR&ED, internally.
That’s a risk, but it’s also a selling point for reputable and professional consulting services. You know… services that are designed to serve and to benefit the client, both short and long-term.
Moving beyond claim preparation involves more work for everyone… for the client as well as for the consultant, and it should be undertaken only with a full understanding of the scope and  impact of an expanded engagement, as well as its potential benefits.  Everybody needs to be fully informed, and understand why it may be desirable to do it. Certainly, a broader engagement involves considerably more risk for the consultant, for the reasons already mentioned, i.e., the client may eventually not need you, or not need you as much.  That’s definitely a risk… and there are good business reasons to do it. Personally, I find it satisfying when a client reports that they can now handle things “just fine” on their own.  Always a bit sad, but satisfying.
Every spring, and every fall, the skies are full of birds that left the nest and flew away on their own. I see nothing to be gained in trying to prevent that from happening.

Bruce Madole

Other articles by Bruce Madole in SRED Unlimited blog