The Government of Canada has several programs to help companies achieve various business goals, including expansion to international markets and generation of export revenue. This is the core value of the CanExport grant, one of the more popular grants in the country.

This article will try to provide all the essential details you should know about CanExport. If you need more information, you can talk to funding specialists from EVAMAX.

EVAMAX is one of the industry leaders in identifying and maximizing government grants for businesses across Canada.

What is the CanExport Grant?

CanExport is a government grant that provides financial aid and advisory services to help SMEs across Canada explore business development opportunities abroad.

It is designed for Canadian businesses to increase their presence in currently underdeveloped global markets.

For a foreign market to be considered viable, the sales generated in it by the applicant for the past 24 months must not exceed $100,000 or 10% of their total sales.

How Did COVID-19 Affect Its Implementation?

Grants involving travel are suspended for the time being. This includes trade shows, trade missions, and all visits to foreign markets. Support for these events will resume once travel restrictions are lifted.

If you have paid for an approved event and could not get a refund from the organizers, 75% of it will be reimbursed by CanExport SMEs.

If instead of a refund, the organizers offer credit for other events in the future, you can still claim this expense.

The COVID-19 situation is very fluid and could change at any given time. For the latest updates on CanExport and other government grants, you can reach out to EVAMAX.

Who Manages CanExport?

The program is managed by the Trade Commissioner Service (TCS) of Global Affairs Canada and the Industrial Research Assistance Program (IRAP).

The combined expertise of the two agencies allows them to deliver a wide range of services. This includes identifying all potential markets, international business partnerships, and opportunities that you would not think possible.

What Are the Sub-Programs and Their Funding Amounts?

CanExport SMEs is the most popular stream under the program. It offers up to $75,000 to eligible SMEs with export market development projects.

The Innovation stream targets small businesses focused on R&D rather than export opportunities. It enables participants to work with foreign partners in developing, adopting, and commercializing new technologies. It also offers up to $75,000 to qualified businesses.

The Associations stream is designed to help national trade organizations in creating business opportunities overseas for their members. Qualified organizations can get financial support to cover 75% of project costs to a maximum of $400,000.

Lastly, the Community Investments stream is open to Canadian communities looking to attract, expand, or retain foreign direct investments. It offers $3,000 to $500,000 for qualified projects, which can be used to cover up to 50% of eligible costs.

What is the Eligibility Criteria for Applicants?

The SMEs stream is open to for-profit companies with no more than 500 full-time employees and revenue of $100,000 to $100 million for the past fiscal year.

The Innovation stream accepts proposals from SMEs, academic institutions, and research centers. Applicants must fully or partially own the IP rights to a Level 4-ready prototype technology that can be launched within five years.

The Associations stream targets Canada’s trade organizations, business councils, and multi-sectoral organizations that are not profit-oriented.

The Community Investments stream is open to Canadian communities and non-profit indigenous organizations that are incorporated locally or federally.

What Activities Are Eligible Under the Program?

In light of the ongoing global pandemic, CanExport funding is limited to the following non-travel development activities:

• Gathering studies, reports, custom market research, and other forms of market intelligence
• Applying for IP protection internationally
• Applying for international market certification
• Fees for legal and business advice
• Launching an SEO campaign
• Translation or creation of marketing tools and materials
• Joining virtual trade shows, meetings, and networking events

Once it is safe to travel, support for international trade missions, foreign market visits, and other in-person events will resume.

How to Apply?

Here is a step-by-step guide on how to approach the application process:
1. Look for five potential export markets. Remember that the revenue you generated in this market for the past 24 months must not exceed $100,000 or 10% of your total sales.
2. Identify potential customers, trade shows, and other events available.
3. Determine the related expenditures such as promotional materials and registration fees. You must be able to show that these costs could generate sales in the target markets.
4. Prepare an outline for your export strategy, estimated budget, and proposed timelines.
5. Access the application forms online. These forms are eight to twelve pages long, not including the supporting documents.
6. Complete the application forms and other requirements, then submit them online. The time it takes to finish the application process depends on the export market readiness.

When Should You Start the Application Process?

Expenses incurred before the approval of the project would not be considered for funding, so it is important to start the application process early. Three months of lead time prior to the planned start date is recommended, especially for the SMEs stream, which is extremely popular.

When is the Deadline for Application?

The CanExport funding program has a continuous intake, so you can apply whenever you are able. Just take into account the lead time recommended when looking for a project.

How Long Does It Take for a Decision to Be Made?

The time it takes to process an application varies, but it could take up to 60 business days. If the application is not eligible, an email is sent explaining the reasons why the project could not be considered. Otherwise, you will be sent an approval and asked to sign a Contribution Agreement.

When Will the Funding Be Given?

Applicants must submit the claim immediately after the completion of the project, as outlined in the Contribution Agreement. It normally takes up to 20 days for claims to be processed.

Receipts are not required when claiming unless specified, but the applicant must keep them and maintain a record of expenses for the duration of the agreement.

What Are the Expectations for Qualified Applicants?

Once a project is approved and the Contribution Agreement signed, you will be responsible for submitting expense claims for the project. You will also be asked to submit detailed reports about the project’s progress.

Every year for three years after project completion, you need to submit a report describing how the project enabled your business to make an impact on Canada’s economy.

Can You Apply for CanExport Even If You Have Other Funding Sources?

You can apply for CanExport on top of other funding sources, but the maximum government assistance for any given project would not exceed 75% of the total cost.

Can You Submit Multiple CanExport Applications?

Companies can submit several funding applications, but the initial project must be finished before more export market development grants will be given.

Are you ready to explore business opportunities overseas? Call EVAMAX today and maximize your chances of submitting a successful CanExport application.


Technology has been evolving ever since man first learned to use stones as tools, but never has it seen such rapid development as it did in recent years.

Today, the world is in the 4th industrial revolution, a time dominated by artificial intelligence (AI), the Internet of Things (IoT), robotics, aeronautics, and other innovative industries.

Not only have the rules changed – we are now playing an entirely different game. And businesses that fail to keep up with the changing times will either fall behind or completely disappear into obscurity and irrelevance.

In Canada, as with the rest of the world, it is crucial for companies to recognize upcoming technological trends. This will help them understand and leverage opportunities as they emerge.

The federal government, through the Scientific Research and Experimental Development program, is always ready to help innovative businesses reach new heights.

The SR&ED program supports research and development R&D activities with much potential for groundbreaking discoveries, much like the ones below:

SR&ED Grants Canada for Emerging AI-as-a-Service Platforms

Artificial intelligence or AI has significantly changed the business landscape. And yet, we have barely scratched the surface.

Companies all over the world are only starting to explore the impact of AI in their daily operations. It offers a wide range of benefits, from streamlining business processes to enhancing customer experience.

But as businesses are still learning to live with AI-based applications, designing and deploying them internally will still come at a hefty price.

AI platforms are currently being offered by the industry’s tech giants. But the solutions they offer are broad in scope. This means that some customization is needed. This can get very expensive.
Still, today’s businesses can enjoy the full benefits of AI, thanks to emerging AI-as-service platform providers.

The IT industry is increasingly adopting the as-a-service business model to AI applications. This allows other companies to access AI services at a more reasonable price point.

It is critical that groundbreaking developments like AI services be available to as many companies as possible. This is the only way that customer satisfaction and business optimization be achieved at a meaningful level.

To this end, the SR&ED program is offering SR&ED tax incentives to IT companies engaged in eligible AI-related projects.

Eligible Canadian-controlled private corporations or CCPCs can earn an SR&ED tax credit of up to 35% of $3 million in qualifying expenditures. This includes a wide range of expenditures, including the following:

• Salary and wages
• Materials
• Contract costs on behalf of the claimant
• Overhead costs
• Third-party payments

Aside from CCPCs, proprietorships and partnerships can apply as long as they have an eligible SR&ED project. Admission to the SR&ED program is focused on the merits of the project and not the company.

SR&ED Funding for Autonomous Driving Projects

Autonomous driving has been gaining traction since the first “truly self-driving car” came out in the 1980s. While the current scope or depth is not yet at the level portrayed in sci-fi movies, reality may not be as far behind as you think.

The year 2021 will most likely be considered as the de facto golden age of autonomous driving as Tesla is set to make its fully self-driving system available as a subscription service.
Most Tesla cars already have the standard Autopilot feature with the automatic brake, accelerate, and steer capabilities, but the new package will take things to a whole new level.

Once operational, it will allow cars to recognize road signs and traffic lights, change lanes when needed, and even park themselves.

Aside from these capabilities linked directly to driving, other in-car features will also become increasingly automated. Data capture and analytics will see a bigger role in security, entertainment, and other functions. And in addition to cars, you can expect trucking and shipping to become more autonomous.

It is becoming apparent that this emerging trend in the automotive industry is much more than just passing fancy. In time, autonomous driving will be the norm and not the exception. Businesses impacted by this development must stay ahead of the curve and explore ways to use it to their advantage.

Innovative companies with ideas on how to accelerate the deployment or utilization of autonomous driving can get a much-needed boost from SR&ED grants. Using these grants, they can pursue research and experimental development activities that could help take autonomous driving to the next level.

For a project to qualify under this tax incentive program, it must meet five basic criteria:

1. A scientific and technological uncertainty is present
2. The hypothesis formulated is designed to reduce or eliminate the uncertainty
3. The approach used is consistent with a systematic investigation or search
4. The approach leads to scientific or technological advancements
5. The hypothesis tested and the ensuing results are documented as the work progressed

With the help of the SR&ED program and other government grants, it won’t be long before autonomous driving transforms the way we travel. It will lower the costs, reduce road congestion, and make commuting less stressful. Most importantly, it will reduce CO2 emissions and improve air quality.

The SR&ED Program: Helping Canadians Utilize Renewable Energy

Another emerging trend that could benefit from the SR&ED program is the use of solar energy in Canada.

In Canada, as with the rest of the world, sustainability is no longer just a buzzword used to generate interest from curious sectors. More and more people are embracing it as way of life.

Canada is abundant in land, with plenty of available roof space. It also receives more sunlight than places like the United Kingdom and Germany. Most importantly, interest in sustainable living is at its highest.

In short, Canada is primed for an increase in uptake for rooftop solar panels.

To date, there are around 40,000 rooftop solar panels installed all over the country, which leaves a lot of room for improvement. But with various government initiatives like the SR&ED program and IRAP funding, innovative companies can find new ways to make solar energy more accessible to Canadians across the country.

The SR&ED Program for Canada’s Innovative Industries

The program offers tax incentives to offset the R&D costs of eligible SR&ED projects, helping Canadian companies optimize their research budget. It comes as a deduction from the tax payable for the current year or income tax for the future years. It can also come as an investment tax credit.

If you are engaged in research activities involving innovative technologies, you should take a close look at how you can leverage SR&ED funding. Funding specialists like EVAMAX can help you put together a viable SR&ED claim.

To know more about Canada’s government grants like the SR&ED program and IRAP funding, call us today at EVAMAX or set an obligation-free consultation through our website.


The National Research Council is the primary research and development agency in Canada. It is mandated by the federal government to deliver the Industrial Research Assistance Program or IRAP – one of the most impactful initiatives of its kind in the country and throughout the world.

IRAP Canada is designed to stimulate economic growth in the country through technology innovation. Its strategy is to provide a combination of services and funding for small and medium sized businesses to increase their research capabilities.

Do you own a small business and need research funding? The IRAP grant offers a great solution. It accepts applications from all Canadian SMEs engaged in various innovation activities. If you need to know more about how it works and how you can maximize it, EVAMAX can help. EVAMAX is a fund finding expert specializing in innovation grants.

Why Should Small Businesses Innovate?

Innovation can be characterized by the emergence of something new. It can be anything from an original product, a better way of doing things, or even a novel idea with the potential for practical applications. Without anything new, there is no innovation. And without innovation, there is no progress.

In essence, the future of the country depends on it. It allows small businesses to stay relevant in an increasingly competitive market, at home and abroad. It solves critical problems and removes barriers to economic growth.

Why is Research Important for Innovation?

Research is important in the above paradigm because innovation grows naturally out of it. Research turns a new idea into something concrete and actionable. Companies at the forefront of their respective industries invest heavily in R&D activities. Those that do not get left behind.

What is the IRAP Program?

Along with SRED, the Industrial Research Assistance Program IRAP is one of the most effective funding programs initiated by the government. It has allowed the National Research Council of Canada to help SMEs across the country for over 70 years, offering financial assistance, mentorship, and access to R&D experts.

What Makes IRAP so Effective?

As a Canadian government program, IRAP funding accessed by eligible companies does not require repayment. It is referred to in the industry as “free money.” If your business is not getting any, you are missing out. It allows even small businesses to pursue R&D activities and challenge bigger companies.

It is important to note that chasing after IRAP funding involves a fair amount of paperwork. To optimize your chances of making a successful claim, you must prepare all the necessary requirements. This is where EVAMAX can help. EVAMAX is among the industry leaders in terms of approval rate and turnaround time.

What Can You Get from IRAP Grants?

IRAP funding can cover up to 80% of salaries and 50% of contractor costs for qualified projects. This comes in the form of non-repayable government funding assistance. The grant amount to be awarded is determined by an Industry Technology Advisor ITA.

IRAP funding amount is generally capped at $150,000, but more can be given after thorough review by the ITA. Funding can be accessed through four streams, each with a specific objective and its own funding specifics.

Stream 1: Small Technology Innovation Projects

This stream is also known as the Accelerated Review Program or ARP. It is designed to speed up the commercialization of new technology through R&D. Eligible businesses could get up to $50,000 to cover 80% internal labor costs and 50% of contractor costs.

Stream 2: Mid-Sized Technology Innovation Projects

In line with the core values of program, this stream aims to remove the barriers that prevent the commercialization of new products. It offers a larger grant of up to $10 million to qualified businesses. This money should be used for internal R&D projects, covering 65% to 80% of eligible labor costs. It can also be used for other activities, such as creating original software.

Stream 3: Youth Employment Strategy Program

This stream focuses on young students or graduates between the ages of 15 and 30. It is designed to enhance the skills of young people and prepare them for a fruitful career in the technology industry. Eligible companies can hire up to two students or graduates. They will receive a budget of $30,000 for each hire, and the expected duration of employment is six to 12 months.

Stream 4: Digital Technology Adoption Pilot Program

Also known as DTAPP, this stream is managed by IRAP as a standalone program. It targets small and medium sized enterprises struggling to adopt new technology. Its end goal is to make Canadian SMEs more competitive against their foreign counterparts.

DTAPP helps small and medium sized businesses in three ways:
⦁ Provide funding and mentorship to Canadian businesses for projects involving digital technology adoption
⦁ Collect data and generate best practices for digital technology adoption
⦁ Promote the benefits of using digital technology for SMEs across Canada

Businesses that qualify for the program will get $100,000 worth of non-repayable funding to cover 80% of internal labor costs and 75% of contractor costs.

Many programs have been launched to address digital technology challenges faced by SMEs in Canada. However, most of them operate at the regional level.

DTAPP is trying to address the issue at a national level. IRAP Edmonton is the same as IRAP Canada, and a network of over 130 offices across the country offer the same level of financial support.

What is the IRAP Funding Criteria?

For your business to qualify, it must meet the following basic requirements:

⦁ Canadian small and medium companies incorporated provincially or federally
⦁ Profit-oriented companies
⦁ Have no more than 500 full-time equivalent employees
⦁ Have long term plans to make a positive impact on the economy by developing, improving, and commercializing technology-driven products or using technology to improve productivity.

What are the IRAP Application Requirements?

Aside from the above criteria, an applicant will be asked to submit the following requirements:

⦁ Leadership team capable of managing an approved project
⦁ Financial capability to cover additional expenditures from approved projects
⦁ Company skills relevant to product development and marketing
⦁ Overview of the technology involved, including potential barriers to project completion
⦁ An estimate of the project’s economic impact upon completion, including potential market share and proposed marketing strategies
⦁ Detailed plan or funding proposal, including timelines and project costs for each milestone

For a more streamlined application, you should prepare the above requirements before approaching a local ITA.

When is the Best Time to Apply?

IRAP follows the fiscal year cutoff of April 1 to March 31 of the following year. Funded projects must be carried out within this period. The program does not specify a deadline for any of the streams, and the application is an open-intake, but it is best to start applying as the fiscal year begins when funding support is replenished.

To maximize your chances at a successful application, talk to our experts here at EVAMAX. We can help you complete your IRAP application form, submit a successful claim, and significantly reduce the turnaround time.

Business success is a moving target. For a company to achieve its long-term goals, it must keep up with the changing times through innovations. This is especially true for developed countries like Canada. Canadian companies must be responsive to evolving technologies and the subsequent changes in consumer behavior.

At the heart of every innovation is research and development or R&D. R&D Canada gives businesses an edge against local and global competition. It also helps small companies compete against their more established counterparts. The key is for them to stretch and maximize their R&D budget.

It is for this reason that the Government of Canada provides many forms of funding for small businesses. Access to any of these government programs is an effective equalizer. With these grants, R&D activities are not just reserved for large companies with significant research budgets. Small businesses can also find ways to challenge products that currently have a firm grip on the market.

The government of Canada provides funding in two ways: through grants and tax credits. An R&D credit is a deduction from taxes owed, an example of which are allowances for R&D capital expenditures. A grant is a sum of money that is given conditionally but does not require repayment. Either of these can be used to launch essential R&D initiatives that could lead to the creation of new products, improvement of existing ones, or the use of new technology to increase productivity.

To navigate the complex landscape of government funds, you should talk to funding experts like EVAMAX. EVAMAX can identify which grant suits your needs and help you submit a successful claim. You can discuss with them any of the following R&D funding programs offered by the Government of Canada:

R&D Credit from SRED Tax Incentive Program

No discussion about government grants can begin without mentioning the Scientific Research and Experimental Development SR&ED program. It is a federal tax incentive program offered through the Canada Revenue Agency or CRA. SRED is arguably the most successful and generous funding source in Canada. It helps over 20,000 businesses every year in their pursuit of research and development projects.
In 2015 alone, the program was able to offer over $3 billion worth of funding. Eligible businesses were able to access SRED funding in three ways:

  • An R&D credit for tax owed
  • A deduction from the income tax
  • A refund of eligible costs if no research and development tax is owed

Activities Funded by SRED

The Scientific Research and Experimental Development grant is a backdated refundable tax credit given to eligible businesses four to 12 months after an approved project is completed. It can be used to cover a wide variety of related costs, from wage subsidy for R&D experts to certain overhead costs:

  • Salaries and wages of employees working directly on an approved project
  • Materials consumed or transformed during approved research and experimental development activity
  • Costs from approved SRED work, whether in-house, through a third party, or with the help of schools and other entities.
  • Third-party payments for outsourced SRED work, as defined by program policy

Who Can Apply?

SRED is open to Canadian controlled private corporations or CCPCs. Eligible CCPCs could get up to 35% worth of R&D credit to cover eligible project costs. The funding cap limit is set at $3 million.

R&D Canada through IRAP

Aside from the SRED tax credit, another government funding program that stands out is the Industrial Research Assistance Program or IRAP. IRAP is delivered by the National Research Council or NRC and is designed to help innovative businesses engage in research and development R&D projects. Its ultimate goal is to stimulate economic growth and create jobs throughout Canada by leveraging innovation.
Activities Funded by IRAP

IRAP supports various activities designed to remove the barriers against internal innovation. This includes the implementation of new software, projects to help boost productivity, and design to marketing of new products.

Eligible businesses could get funding of up to $50,000. It can be used to pay for 80% of the salaries and 50% of contractor costs of approved projects. The funding amount is generally capped at $150,000.

Who Can Apply?

For businesses to qualify for the IRAP, they must be incorporated in Canada for the past two years. In addition, the company must have no more than 500 full-time equivalent employees.

Support from the SIF

The Strategic Innovation Fund or SIF is next in the long line of successful R&D funding programs launched by the Government of Canada. It is designed to support businesses in their quest for technology development projects through R&D Canada.

Activities Funded by SIF

Eligible businesses can access SIF in two ways: through the Business Innovation and the Growth streams. SIF supports large innovative projects with over $10 million worth of expenditures. It offers financial support that can be used to cover up to 50% of qualified expenditures. It can come as a combination of repayable and non-repayable contributions.
Projects that target technology development acceleration have a chance to qualify for one stream of the program. Efforts to accelerate the introduction of innovative products into the market are supported by the other.

Who Can Apply?

SIF is open to businesses across all sectors throughout Canada, especially those engaged in projects that promote technological development and product commercialization through R&D. If the project is an integral part of a company’s long-term business plan, there is a higher chance of qualifying.

Specific eligibility criteria depend heavily on the type of business and what industry it is in. To find out if SIF is a good fit for your business, you can talk to fund finding experts like EVAMAX.

Collaboration Through the CIIP

The Canada International Innovation Program or CIIP is a government program that encourages collaborations with international partners. Countries included in the program are Brazil, China, India, Israel, and South Korea. For projects to qualify under the CIIP, they must have the potential to achieve commercial success.

Activities Funded by CIIP

CCIP supports activities such as technology adaptation, validation, and co-development. Qualified projects could receive funding of up to 50% of relevant costs, up to a maximum of $600,000.
Networking events that could lead to collaborative projects involving R&D Canada and foreign partners are also eligible under the program. CIIP can cover a maximum of 50% of eligible expenditures, up to a maximum of $15,000.

Who Can Apply?

Small and medium-sized Canadian for-profit companies seeking to improve products, services, and processes are welcome to apply. They must be willing to collaborate with foreign partners. In addition, the project involved must be commercially viable.
Non-Repayable Funding from ISC
Innovative Solutions Canada or ISC is a proposal-based initiative launched by the Government of Canada. It is designed to help business innovators bring new ideas to the market. A strong focus is given to projects that provide solutions to departmental challenges within the federal government.

Activities Funded by ISC

ISC supports technology research, product development, and its ensuing commercialization. Eligible businesses with an approved proposal could get $150,000 worth of funds for Phase 1, which is proof of concept. Concepts that meet the criteria are invited to Phase 2 (product development), where they will be awarded up to $1 million. If the prototype from Phase 2 meets the needs of the government, they will purchase it from the business, providing a pathway to commercialization.

Who Can Apply?

ISC is open to start-ups and SMEs from all industries and across Canada. They must be incorporated in the country, whether federally or provincially. Applying companies must have less than 500 full-time employees, and at least half of them must be based in Canada.
Final Thoughts on R&D Canada

The Government of Canada has many innovation funding programs that can help businesses meet various business goals. This includes doing research activities and product development projects that can bring innovative ideas to market.

If your company lacks technical and technological capabilities, you can still pursue innovation. Using funds from government grants, you can hire R&D experts, purchase the necessary equipment, or outsource other activities.

The grants discussed above are just some of the many being offered in Canada. All you need to do is find the one best suited for your needs. If you want to know more about potential funding options available to you, EVAMAX can help.

EVAMAX has served over 900 clients, helping them gain access to over $115 million in funding. Call today for an obligation-free consultation and find out how you can get free money for your business.

Only a few business owners have not heard of the Scientific Research and Experimental Development Program or SRED grant. Still, not many have successfully claimed for SRED financing. They either fail to submit an application believing that they do not qualify or were not prepared enough and fell short in their attempt.

This SRED Guide will help you avoid both situations. After you read this article, you will gain a deeper insight into this generous tax incentive program, find out if your business is eligible, and learn the basics of how to apply.

It is important to note that consulting with a fund finding expert like EVAMAX is still your best option. Companies such as EVAMAX specialize in government grants like SRED and will put you in the best position to submit a successful claim.

Nevertheless, this article will help you take the first and most important step: deciding to go for the SRED grant. It will also help you negotiate the complicated process of SRED Ontario, which is a very generous government grant for Canadian businesses.

What is the SRED grant?
The SRED grant is a federal tax incentive program administered by the Canada Revenue Agency or CRA in behalf of the Canadian government. It is one of the many ways that the government encourages Canadian businesses to engage in research and experimental development.

If you run a small business and feel that the SRED is not for you, think again. Of the $3 billion or more that the SR&ED program gives every year, 75% go to small businesses across all sectors. As long as you invest in R&D and are involved in eligible scientific research and experimental projects, you can apply for SR&ED financing.

How Can Businesses Benefit from SRED?

The SRED grant is perhaps the largest incentive program from Canada’s federal government. Every year, it helps over 20,000 businesses conduct scientific research and experimental development projects.

Without SRED funding, many of these businesses would not be able to do R&D work on their own. It means that, absent the SRED grant, technology and innovation among business sectors will remain stagnant, and Canada’s economy would not be viable for very long.
There are three ways that eligible businesses can benefit from SRED financing:

⦁ Through an SR&ED investment tax credit
⦁ An income tax deduction
⦁ A refund for eligible expenditures

What Expenses Are Eligible for SR&ED Claims?
The SR&ED tax incentives can be used to cover various eligible costs:
Salary and wages The SRED grant covers salaries and wages of employees directly engaged in the eligible project, including the following:

  • Taxable benefits
  • Bonuses
  • Profit-based compensations
  • Inducements and non-competition payments

The SRED financing for salaries and wages can be computed by proxy method or traditional method. If you use the traditional method, you can include the salaries and wages of those supervising or supporting the SR&ED work.
Materials for SR&ED

According to CRA’s guidelines, the term “materials” applies to raw materials, substances, and other items that are relevant to the SRED process in two ways:

  • When materials are consumed while doing the SRED work
  • When materials are transformed during the SRED process

Whether you use the proxy or traditional method, the material cost involved must be an expenditure of a current nature instead of a capital nature. Some examples of capital expenditures are the purchase of equipment, data, or software license. These and similar material costs are not eligible for SRED financing.

SRED Contracts on Behalf of the Claimant
Qualified businesses can carry out the SRED work in-house, through a third party, or with the help of other entities such as schools and not-for-profit SRED corporations.

If you lack the skills or facilities and decide to hire a third party, you can claim 80% of the expenditures through SRED financing. The company you hired could also submit a claim, but their eligible expenditures would be reduced to prevent duplication of SRED benefits.
Overhead Costs

The overhead cost specific to the SRED grant is different from the generally accepted term in accounting principles used across Canada. For SRED, overhead costs refer to expenditures resulting from the pursuit of SRED activities as outlined by the SRED’s policy.
Costs stemming from the provision of premises, facilities, and equipment needed to execute the qualified project are SR&ED refundable.
These guidelines are discussed more thoroughly in Form T661, which the official SRED expenditure claim form. Expert fund funders such as EVAMAX could help you with this.
Third-Party Payments

Aside from contract expenditures incurred from hiring other entities to do SRED work, the program also covers third-party payments. However, it can be hard to tell the difference between the two. There are five ways to know if you are dealing with one or the other:

  • Third-party payment applies if the performing entity controls the project. If the Claiming party is in control, then contract expenditure applies.
  • If the right to exploit the results of the project is exclusive, it falls under contract expenditures. If it is non-inclusive, it is classified as a third-party payment.
  • If there are two funders or more, it is deemed a third-party project. Otherwise, it falls under the contract expenditure.
  • If the SRED project is commercially focused, then it falls under contract expenditures. Basic or applied research is considered a third-party project.
  • If the tax is accrued, it generally falls under contract expenditures. If the tax treatment is on a cash basis, the third-party payment applies.

Who Are Eligible to Apply?
Businesses across all sectors can apply for the Scientific Research and Experimental Development SR&ED grant. However, different types of companies will have different ways to access the grant. Additionally, the amount they can get in the form of an investment tax credit, income tax reduction, or direct refund will also vary.

Private Corporations Under Canadian Control
As defined by the CRA, a Canadian Controlled private corporation or CCPC is a company that has been up and running in Canada since 1971 and is being controlled by a resident of Canada. Also, it must not list its shares outside of the country.
Qualified CCPCs could earn a refundable ITC amounting to 35% of eligible projects worth up to $3 million.
For CCPCs that meet the criteria for a qualifying corporation, a refundable ITC of 15% for over $3 million is added, and 40% of the ITC can be recovered in the form of a tax credit.

Individuals (Proprietorship) and Trusts
Proprietorships and trusts with eligible projects can apply for the SRED grant. If they qualify, they could get up to 15% worth of tax credits for eligible expenses. If the tax credit surpasses the tax payable, 40% of this amount can be accessed in the form of a refund.

Other Corporations
Companies not classified as CCPCs can still apply. If their projects qualify, they get a non-refundable tax credit amounting to 15% of the eligible expenditures.

Partnerships
Members of a partnership that do not pay taxes could not earn a tax credit directly. Still, those with projects eligible for SR&ED are encouraged to apply. For eligible claimants, the tax credit would first be computed at the partnership level before being allocated to qualified members.

What Documents Are Required When Submitting an Application?
The type of supporting documents required will depend much on the nature of SRED work being carried out. These are general information and record of various forms proving that SRED work was done in the year resulting in qualified expenditures. Below are some examples:

  • Documents showing project planning
  • Documents indicating the design of the experiment
  • Technical drawings and design documents
  • Laboratory notes and project records
  •  Records or trial runs
  •  Test protocols, data analysis, and conclusions
  • Photographs and videos showing SRED work
  • Proof of payments and accounting records

It is best to keep all documents and evidence to support your claim. If the CRA selects your project, a committee will review all of them.
The complex application process can be discouraging, especially if you are a first-time applicant. It is best to submit an application with the help of CRA and a fund finding expert like EVAMAX.

How to Submit an Application
Interested parties must include a completed Form T661 when filing for an income tax return. You can provide technical information using this form. Qualified SRED expenses will also be calculated in the T661 Form. For corporations, Form T2SCH31 is needed on top of Form T661. For individuals, you must submit Forms T2038 and T661.

You can use Form T4088, which is a guide to Form T661. Fund Finding experts like EVAMAX can help you make sense of all the relevant forms and the entire application process.

Take the First Step
Are you ready to take the first step toward reduced R&D costs and a more innovative business? Let EVAMAX help you navigate the complicated SRED application process. EVAMAX specializes in SRED grant and other government grants in Canada.

Give us a call and be one of Canada’s innovative businesses who have benefited from the SR&ED.

 

Do you have a groundbreaking business idea that you are hesitant to pursue due to cost considerations? Have you heard about the Canadian Government’s Scientific Research and Experimental Development program or SR&ED?
If you want to take your company in a new direction but waver at the thought of its corresponding costs, then it is time you learned about the SR&ED program or SRED program Canada.

What is the Canada SR&ED Grant?

If your business is engaged in a science or technology-related industry, then you understand how difficult it is to innovate. Coming up with a groundbreaking idea is a challenge in and of itself. Developing it for practical use is even harder. Still, it is a challenge that has to be met if industries are to be sustainably beneficial to target consumers.

This is where the Canada Revenue Agency’s Scientific Research and Experimental Development program comes in.

The SR&ED is a tax incentive program created to encourage technological advancement in medium and small businesses as well as startups. Its end goal is to help companies develop new processes, devices, materials, or products of any form that can improve the consumers’ quality of life.
The SR&ED offers innovative businesses much needed support in the form of SRED funding, rebates, or SRED tax credits. Every year, the program processes over 20,000 SR&ED claims amounting to over $3 billion in tax incentives.

What Projects Qualify for the Program?

The government’s SR&ED program is open to Canadian businesses of all sectors. However, it is important to find out first if your potential project is eligible for the SRED tax credit. Below are the three qualifying criteria:

  • Basic Research

This is a type of project designed purely for the advancement of scientific knowledge with no immediate or intended practical application. It is normally carried in a laboratory and under a controlled environment. Once done, the results are published in scientific journals for others in the innovation community to evaluate, verify, or build on.

  • Applied Research

This is a type of research design intended to solve a specific problem or lead to an innovative solution with the end goal of a practical application for economic growth. Like basic research, its results can also be published in scientific journals.

  • Experimental Development

This type of project aims to achieve technological advancement in the form of new material, process, or consumer product, or the improvement of an existing one.

Your project would also be eligible for SR&ED if it supports a taxpayer’s work that meets the above criteria. However, it is important to note that there are exclusions that would say a task does not qualify. As a general rule, a type of work that leads to technological advancement, solves a scientific uncertainty or involves a detailed and systematic investigation by trained people qualifies for the SR&ED.

How Can Your Business Benefit from SRED Credits?

As virtually any business can avail of the SR&ED, the tax incentive program attracts all types of companies. The benefit comes in three ways: as an investment tax credit or ITC, as income tax reduction, or as a direct refund. However, the amounts may vary from one type of business to another:

  • Canadian controlled private corporations

A private corporation that has been operating in Canada since 1971 and is not controlled by non-resident individuals nor lists its shares outside of the country is considered a Canadian controlled private corporation. This type of company stands to earn a refundable ITC of 35% on SR&ED-eligible projects worth $3 million. If aside from being a CCPC, the company also meets the criteria for being a qualifying corporation, a refundable ITC of 15% for over $3 million is added, and 40% of the ITC can be reimbursed.

  • Other corporations

Corporations that do not fall under the definition of the CCPC can also benefit from the SR&ED should their project qualify. This can be in the form of a non-refundable ITC amounting to 15% of the total expenditures, resulting in a reduction of the payable tax.

  • Individuals and trusts

Proprietorships and trusts can also apply for the SR&ED program. If their projects meet the criteria, they stand to earn a refundable ITC with a rate of 15% of the project spending. Once the ITC is applied against the tax payable, the CRA can proceed to refund 40% of the ITCs that have been earned for the year but not yet claimed.

  • Members of a partnership

A partnership is not a taxpayer and could not earn an ITC directly. If you have plans of claiming a SRED claim for a partnership, the ITC would indeed be computed at the partnership level. Then it will be allocated to qualified members such as individuals, corporations, or trusts.

Find Out More About the SRED Program

The concept of the SR&ED tax credit can be confusing, especially if it is your first time hearing about it. To find out more about this incentive program, how you can benefit from it, or to complete your form T661, contact us today at EVAMAX.