The video gaming industry is one of the more important economic segments in Canada.

Based on a 2019 study by the Entertainment Software Association of Canada, a non-profit trade association representing the entertainment software industry, this sector contributes $4.5 billion to the country’s Gross Domestic Product every year, up by 20% from its performance in 2017.

Out of the $4.5 billion, $2.6 billion is generated directly by the industry. The other $1.9 billion is either induced or earned indirectly.

Number of Game Developers in Canada

Around 700 game development studios are active in the country as of 2019, 16% more than their number in 2017. Much of the growth took place in Ontario and other regions such as the Prairies and Atlantic Canada, where 129 new companies emerged.

Still, Quebec, Ontario, and British Columbia account for most of the activity in the country’s video gaming sector, hosting 82% of all the game studios in the country.

Government Support for Canada’s Gaming Industry

In terms of global presence, Canada is one of the biggest sources of game development in the world, behind only Japan and the US. This is mainly due to the large pool of talent drawn to the country’s assortment of provincial and federal grants:

  • Scientific Research and Experimental Development or SR&ED program
  • Canada Media Fund: Experimental Stream
  • Industrial Research Assistance Program or IRAP Funding
  • CanExport Grant
  • British Columbia Interactive Digital Media Tax Credit or BCIDMTC
  • British Columbia Investment Capital Program Tax Credit (New Media Venture Capital)
  • Ontario Interactive Digital Media Tax Credit or OIDMTC
  • Quebec Production of Multimedia Titles Tax Credit

These are just some of Canada’s funding opportunities, supporting game developers from conceptualization to production to advertising in export markets.

 

Employment Opportunities in the Gaming Industry 

Several government grants helped game developers push the total number of full-time employees or FTEs in the industry to 48,000 as of 2019. Over 27,000 of these FTEs are employed directly, 28% more than was employed in 2017.

In Ontario alone, five thousand full-time jobs were added since 2017, an increase of 32% from the previous count. Within the same period, around 3,100 FTEs were added in Ontario.

While Canada is home to some of the most prominent game developers in the world, over half of all the gaming companies across the country are micro-enterprises with fewer than five employees. Almost a third are small businesses with up to 25 employees.

The overall average salary is more or less the same from small businesses to very large companies, which is at a little over $70,000.

Impact on Canada’s Economy

Canada’s video gaming industry generated a total of $3.6 billion in revenue in 2019, 15% more than what it earned in 2017.

It was and still is largely export-driven, with three-quarters of its earnings coming from overseas markets. This is true for all company sizes, from micro-enterprises of less than five employees to very large corporations with more than 100 employees.

Among its sources of income, transfer pricing is the most significant contributor, accounting for roughly 41% of its total revenue. This includes a wide range of transactions, from sales support to contract R&D services to manufacturing and distribution.

In-game sales are the second-highest source of revenue at 13%, while game unit sales and industry tax credits are not far behind at 11% each. This points to the fact that Canadian companies focus more on the product development cycle, releasing only a few titles in the past year.

In terms of expenditures, the video gaming industry spent around $3.2 billion in 2019, which was 24% higher than the reported expenditure two years prior. Over 60% went to salaries and wages, while 34% was spent on non-labor expenses.

Quebec accounts for almost half of the total industry expenditure at 47%. British Columbia is second at 26%, and Ontario is third at 18%.

SR&ED Grants Canada and the Video Gaming Industry

Several game developers have been operating in the country since the 1980s, producing iconic games like Boulder Dash, Evolution, and BC’s Quest for Tires. As the decades passed, many of them moved to or opened in the East Coast, where government support for the industry is more robust.

One example is Ubisoft, a French game developer with several studios throughout the world. In 1997, Ubisoft set up shop in Montreal with the support of government tax incentives. It was not long after that other game developers like Electronic Arts and Warner Bros. Interactive Arts followed suit.

Leveraging the SR&ED Program for Game Developers

The SR&ED program is a federal tax incentive program that can level the playing field for smaller companies across Canada.

It offers SR&ED tax incentives in the form of income tax deduction or investment tax credit (ITC) to qualified projects resolving scientific and technological uncertainties using systematic investigation.

The SR&ED program is open to all Canadian controlled private corporations or CCPCs. Conditions for eligibility focus more on the project instead of the applying entity. This means that any business can submit an SR&ED claim regardless of what industry it is in, as long as the project is eligible.

Access to SR&ED funding can help small businesses pursue research and experimental development activities necessary to monetize innovative ideas as new or better products and services.

Gaming Innovation with SR&ED Funding

Canada’s video gaming industry is currently at the forefront of groundbreaking trends with emerging technologies like virtual reality, augmented reality, cloud gaming, and even blockchains.

With these technological advancements, game developers are in the best position to create products that can entertain Canadians and make it easier for them to stay indoors during the pandemic. It will also help generate more employment opportunities at a time when they are needed most.

The SR&ED program covers costs for salaries and wages, making it extremely helpful to the gaming sector where much is spent on labor costs. The SR&ED funding is also applicable to material costs, some overhead costs, and contractor services resulting from qualified SR&ED projects.

With access to skilled experts and advanced tools, studios can create more prototypes for either mobile or online platforms. They can also integrate better features like motion capture, improved processing power, and advanced algorithm designs.

 

What Canada’s Game Developers Can Get from the SR&ED Program 

Game studios with eligible SR&ED projects can earn up to 35% ITC for the first $3 million in qualifying expenditures and another 15% of non-refundable ITC for exceeding costs.

The Canada Revenue Agency, the implementing body of the SR&ED program, also awards qualifying corporations with 15% ITC for eligible costs over $3 million, 40% of which can be refunded.

Other corporations can earn 15% non-refundable ITC for all qualified costs.

Whether it is through a deduction from the tax payable, an SR&ED tax credit, or a refund, access to SR&ED funding can help stretch even the most limited research and development R&D budget, allowing small game developers to stay relevant in a very competitive industry.

If you haven’t taken advantage of this generous grant for your business, your best option is to talk to funding specialists from EVAMAX.

We can help you throughout the application process, from the preparation of all required documents to the government follow-ups for approval.

For a free consultation on the SR&ED program and other innovation grants, give us a call or set an appointment through our website.

It has been over a year since the COVID-19 virus first hit, and things are slowly coming into focus. The world is learning to navigate the perils of the new normal. Even better, different vaccines are already being deployed in most parts of the world.

Still, this encouraging development in the vaccine front has made experts in Canada realize one important thing: more vaccine doses are needed, and fast.

It is this realization that compelled local biotech companies to continue working towards a Canadian-made vaccine.

While the government is working hard to secure COVID vaccines from international partners, it is not yet at a pace that inspires confidence from most Canadians. Another challenge is that Canada is presently not capable of manufacturing these vaccines locally.

Between the emergence of more contagious variants and the steep global demand, developing a local vaccine would be a game-changer in the fight against the virus.

It will make Canada less dependent on foreign vaccine brands like Pfizer and Moderna. It will also help Canadians gain “herd immunity” faster and take the next step towards a healthy future sooner.

 

Leveraging Canada’s Government Programs

Through government initiatives like IRAP funding and the SR&ED program, local companies are gaining a lot of headway in the efforts to develop a Canadian vaccine. First in line is Entos Pharmaceuticals, an Edmonton-based biotech company specializing in advanced nucleic acid-based therapies using a proprietary drug delivery system.

Entos is set to start Phase 1 of their clinical trials after the federal government guaranteed funding in the tens of millions of dollars. They are currently working on two DNA vaccines, one of which is awaiting transport from a lab in Ottawa to Halifax for the next phase of the approval process.

In DNA vaccines, a small part of the virus’s own genetic material is replicated and produced. Once injected, it convinces the immune system that the body is being attacked by the virus itself, triggering the production of proteins directly in the cells. This process activates the antibodies to fight the virus.

DNA vaccine production is faster and cheaper compared to traditional vaccines, where a weakened version of the virus is used. DNA vaccines are also more stable. They can last for a year when refrigerated and a month at room temperature without losing their activity. On the other hand, traditional vaccines require refrigeration. These advantages compelled Entos to develop DNA vaccines instead of conventional ones.

Aside from Entos Pharmaceuticals’ DNA vaccine, there are others being developed within the area. Worth mentioning is the one being studied at the University of Alberta’s Li Ka Shing Applied Virology Institute. They are developing a vaccine that targets the S spike protein’s receptor-binding domain. It has performed well under laboratory settings against Wuhan’s original strain and the newer strain from the UK. Its efficacy is currently being tested against the South African strain.

To date, around 1.5 million doses of the COVID vaccine have been administered across Canada. Experts believe that this process of vaccination will go on until 2022. And with billions more all over the world that need to be inoculated, it makes sense to continue the pursuit of a made-in-Canada vaccine.

The Importance of SR&ED Grants Canada and Other Government Programs 

Research is an integral part of healthcare, especially in the pursuit of the COVID-19 vaccine. It allows scientists to identify the antigen that can potentially prevent the disease. It drives the clinical trials that establish the appropriate dosage, the efficacy of the vaccine, and its potential side effects. None of the vaccines today would be available without extensive research activities.

Still, R&D involves a lot of expenses. Projects like vaccine development require experienced researchers to carry out experiments, analyze data, and prepare publications or presentations. This level of expertise comes at a high price.

Aside from the personnel, the consumable materials needed for research are also expensive. From disposable plastics for tissue cultures to specialized media for growing antibodies, the costs can add up to a significant amount.

Finally, the cost of the lab equipment needed to conduct biological research can be daunting. The maintenance alone needed to keep them in good running condition could go up to thousands of dollars in contractor costs.

With all the expenses involved in vaccine development, biotech companies in Canada need all the help they can get. This is where government grants like the Scientific Research and Experimental Development or SR&ED program come in.

 

The SR&ED program is a tax incentive program helping businesses pursue research and experimental development activities geared towards improving the quality of life throughout Canada. It offers SR&ED funding for the salaries and wages of R&D specialists, materials, contractor costs, and certain overhead costs.

The SR&ED tax incentives can be deducted from the successful applicant’s income tax or claimed as an investment tax credit. In some situations, a tax refund is given.

The SR&ED program is open to Canadian controlled private corporations or CCPCs with eligible SR&ED projects. Vaccine development falls squarely inside its eligibility criteria:

  • The presence of a scientific and technological uncertainty
  • The presence of a hypothesis to eliminate the uncertainty
  • The use of systematic investigation to implement the hypothesis
  • The adoption of an approach that could lead to scientific and technological advancements
  • Records were kept as the project progressed

Canadian companies eligible for SR&ED funding can earn a refundable ITC of up to 35% of the first $3 million in qualifying expenditures. For eligible SR&ED costs over $3 million, a 15% non-refundable ITC is awarded, deductible from the tax payable for the fiscal year.

Additionally, CCPCs that qualify under the criteria of the Canada Revenue Agency can earn tax incentives of 15% ITC for eligible costs over $3 million. Out of this amount, 40% can be refunded.

Other corporations can claim for an SR&ED tax credit. Those with eligible research and development R&D projects can earn a non-refundable ITC of 15% for all related costs. Trusts, partnerships, and proprietorships can also qualify. For more information on the funding details, give us a call at EVAMAX.

With all the financial support available through the SR&ED program, it is essential that Canadian businesses learn not only how to submit an SR&ED claim but how to get the highest amount of money. This is where EVAMAX can help.

EVAMAX is a fund finding expert specializing in government grants like the SR&ED program, IRAP, CanExport, and Alberta Innovates.

With more than 17 years of experience in innovation grants, EVAMAX has helped over 900 clients claim over $115 million in government funds.

Do you need help in accessing SR&ED funding for your business?

Call us today at EVAMAX. Our funding specialists can guide you throughout the application process, from preparation to approval.

The age-old debate of progress versus sustainability is coming into focus in Canada. And the result does not necessarily lean one way or the other. There is no need to choose between well-paying jobs and clean air or water – this is the mantra that the federal government is rallying around.

Canada’s recent initiative, aptly named A Healthy Environment and a Healthy Economy, is ambitious in its goals and scope. It is built on the premise that fighting climate change is good not only for the environment but also for the economy. The plan outlines detailed steps to create new jobs while ensuring that succeeding generations will continue to have access to clean air and water.

Along with well-established grants like IRAP funding and the Scientific Research and Experimental Development or SR&ED program, this climate plan will lay the groundwork for a strong Canadian economy that does not put the future at risk.

Supporting Sustainable Technologies with SR&ED Grants Canada

The SR&ED program is a federal tax incentive program that supports research and experimental development activities involving clean tech, sustainable technologies, and other innovative solutions. It offers tax incentives for eligible SR&ED projects in the form of an income tax deduction or an investment tax credit.

Canadian controlled private corporations or CCPCs that qualify for SR&ED funding can earn up to 35% in refundable SR&ED tax credit for the first $3 million of qualifying expenditures, and 15% non-refundable ITC for the excess amount.

Canadian companies that also meet the criteria of the Canada Revenue Agency or CRA can earn up to 15% ITC for eligible costs over $3 million, 40% of which can be refunded.

Other corporations, partnerships, proprietorships, and trusts are also eligible to claim for SR&ED tax incentives. They can get SR&ED funding of up to 15% ITC for all qualifying expenditures. This can be deducted from the tax payable for the fiscal year that the eligible SR&ED projects are carried out.

The research and development R&D project must be designed to resolve a scientific and technological uncertainty for it to qualify under the SR&ED program. In addition, it must use a systematic investigation that would potentially lead to technological advancements.

Since it was launched in 1986, the SR&ED program has helped thousands of small businesses across Canada pursue R&D activities. Every year, it has over 18,000 claimants from all sectors, including those working on environmental technologies, biofuels, climate change, and other forms of clean tech. The annual SR&ED claim amounts to over $4 billion.

The SR&ED program has been front and center in the fight against climate change. With the government’s new plan, Canada’s trajectory to a sustainable future has become even clearer.

To find out how SR&ED funding can help your business advance sustainability, talk to our funding specialists here at EVAMAX.

Canada’s New Climate Plan

On December 11, 2020, the Prime Minister of Canada announced the launching of A Healthy Environment and a Healthy Economy. This proclamation came amidst the government’s efforts to navigate the unprecedented COVID-19 situation.

While the pandemic presents an immediate concern, this is no reason for past environmental efforts to be abandoned. Climate change is one of the biggest perils that Canada has been facing and will continue to face. If any form of long-term success is to be achieved, it must be addressed along with the continuing threat of the virus.

The plan commits $15 billion for 64 new measures, creating one million jobs in the process. It will deploy five key measures, each one designed to make Canada’s economy stronger and its communities more liveable.

Reducing Energy Waste in Canadian Homes

A significant part of the climate plan is to help Canadians make their homes more energy-efficient. With less power requirement, comfort will come at a more affordable cost. What is more, it will cut the pollution generated and create employment opportunities during its implementation.

The government has several plans in place towards this goal. They are set to invest $1.5 billion in sustainable and inclusive community buildings over the next three years, while $2.6 billion is earmarked for the next seven years to help make Canadian homes more energy-efficient. Another $2 billion will be invested to retrofit buildings, with the cost to be recovered from the subsequent energy savings.

To ensure a smooth transition, the entire supply chain will be enabled. Collaboration between the construction industry and other stakeholders will be facilitated, ensuring that there are enough locally-sourced materials available.

The government will also implement for the first time infrastructure assessments at a national level, to help identify and address barriers that prevent a net-zero emissions future.

Affordable, Clean Transportation and Power

The government is looking to make clean electricity accessible to more Canadians by investing in renewable energy technology. They will also work towards a zero-emission transportation system, making communities across the country healthier and more active.

The goal is to make Canada net-zero in carbon emissions by 2050, as outlined in the 2015 Paris Agreement.

To make the zero-emission future a reality, the government will invest $287 million for a period of two years in the Incentives for Zero-Emission or iZeV program, while $150 million will be spent on charging and refueling stations all over Canada for the next three years.

To make clean and affordable electricity more accessible, $964 million will be invested in the modernization of energy grids and the advancement of renewable energy in the next four years.

Another $300 million will be invested over the next five years to ensure that clean energy is made available to communities currently dependent on diesel. The objective is for them to make the transition by 2030.

These investments, along with other improvements, will make clean power and transportation more affordable in Canada, reducing carbon emission dramatically.

Ensure that the Price of Pollution Remains High

Putting a high price on pollution and giving the earnings back to homes is an effective measure to achieve both economic and environmental goals. This has been proven in Canada, where the carbon tax is high.

Building on the previous success of this approach, the government is set to raise the price tag of carbon every year by $15 per ton. This will be implemented starting 2022.

From the current cost of $30 per ton, this will grow to $170 per ton in the next ten years. In addition, the rebates from this pollution pricing will be distributed quarterly starting in 2022, instead of the previously practiced annual basis.

Leverage Canadian Industries to Reduce Pollution

The government is helping Canadian businesses in their efforts to provide low-carbon solutions to local and global consumers who want it. Support is also given to industries with a high carbon footprint as part of the Net-Zero Challenge.

An investment of $3 billion will be made to accelerate the implementation of carbon-reduction projects among large emitters. Another $1.5 billion is allocated to boost the production and use of low-carbon fuels.

In the agricultural sector, $165.7 million will be invested over the next seven years for the successful integration of clean technology. The Sustainable Development Technology Canada will also receive an infusion of $750 million in the next five years. This is intended for the commercialization of emerging clean technologies.

Aside from the above investments, the government is also looking to collaborate with Canadian businesses, develop new regulations, and leverage their purchasing power to enable all stakeholders.

Making Healthier Communities by Empowering Nature

Nature seems fragile in the face of climate change. Still, empowering it can be instrumental in the fight for a sustainable future.

As outlined in the climate plan, two billion trees are set to be planted throughout Canada. It will preserve and restore nature, reducing pollution and creating thousands of jobs in the process.

A total of $3.16 billion will be invested over the next ten years to implement this plan down to the grassroots level. An additional $631 million will be invested over the same period for the restoration and improvement of grasslands, wetlands, peatlands, and agricultural lands.

The Natural Climate Solutions for Agriculture Fund will also be established. It will be given funding worth $98.4 million over the next ten years.

The risk from climate change becomes more urgent as the years pass. It is important to act now while the situation can still be managed.

A new plan is already in place, and previous initiatives like the SR&ED program are still going strong. As the government continues to spearhead the battle for our future, businesses and communities must follow suit.

To find out more about the government grants like the SR&ED program, call us today at EVAMAX.

 

The Government of Canada has several programs to help businesses achieve a wide range of goals, from expanding to export markets to advancing clean technology. Noteworthy among these initiatives is the Scientific Research and Experimental Development program or SR&ED.

SR&ED is a federal tax incentive program that encourages small businesses to pursue research activities in Canada. SR&ED tax incentives come in the form of an income tax deduction or an investment tax credit. In certain cases, a refund is given.

The SR&ED program is open to Canadian businesses from all sectors. Its focus is not on the companies but the merits of the SR&ED projects.

For a project to qualify, it must try to resolve an existing scientific and technological uncertainty. The goal is for technological advancements to be achieved using a systematic investigation.

But while the SR&ED program does not judge its applicants based on what industry they are in, the conditions above make it appealing to businesses engaged in innovation. One example is blockchains, the technology used in cryptocurrency.

If you want to know more about the SR&ED program or need to submit a viable SR&ED claim, our funding experts here at EVAMAX will be happy to help.

For more information about blockchains and how they relate to cryptocurrency, please read on.

Blockchain Technology and Cryptocurrency

Blockchains first came out in 2008. They served as the public transaction ledger of Bitcoin, a virtual currency that uses peer-to-peer technology to enable instant payments.

With the business landscape and consumer behavior increasingly favoring digital platforms, delivering accurate information faster has become essential. The blockchain played its role perfectly in carrying this information.

Blockchains are transparent and immutable, accessible only to authorized network members. They are ideal for tracking orders, accounts, production, payments, and many more.

Despite the obvious benefits that come with blockchain technology and cryptocurrency, many people are still in the dark as to how they really work. This is understandable as the whole ecosystem was designed to be complex, making it more decentralized and secure.

To better understand blockchains and cryptocurrency, you would need to do a lot of research. Here are some of the terms you will encounter as you navigate the complex waters of crypto space.

Blockchain

A blockchain is a specific type of database where information is stored in blocks and chained together. As new information comes, it is stored in a fresh block. Once the new block is full, it is attached to the previous block. The result is a chain of data arranged in chronological order.

Blockchains have many business applications, but they are commonly used as ledgers for virtual transactions. In the case of Bitcoin, control over blockchains is shared by all users in a decentralized manner.

Another interesting fact about blockchains is that once the data is entered, it could not be altered. This characteristic adds a layer of security for Bitcoin as it is permanent and could be viewed by all the stakeholders.

Block

In the context of Bitcoin, a block is a file where information relating to the cryptocurrency network is stored permanently. It records the most recent transactions that have not yet been entered into prior logs. In this regard, it can be likened to a page of a record book or a ledger.

A block is created after a miner solves a complex mathematical problem. The solution is shared with and validated by other mining nodes. For each problem that is solved, a pre-determined amount of bitcoin is minted and awarded to the successful miner, after which it enters into circulation. The current rate is 6.25 BTC for each block mined.

Cryptocurrency

A cryptocurrency is a form of digital asset based on a network that spans a large number of computers. This format allows it to exist outside the control of central authorities, including the government. Still, it is secured by high-level cryptography that makes it virtually impossible to double-spend or counterfeit. This allows it to facilitate secure payments online using ledger entries that are internal to the system.

Mining

Mining is the practice of performing complex operations to solve mathematical problems. These problems come from the transactions contained in the block as well as the answers from previous blocks. The process of solving a problem verifies the legitimacy of Bitcoin transactions. In this sense, miners act like auditors, keeping the network honest.

Blockchain Explorer

A blockchain explorer is a browser that can be used to navigate the blockchain in the platform it is on. It allows the user to do many things, from exploring recently mined blocks to checking the history of every public Bitcoin address.

Crypto Wallet

A cryptocurrency wallet is a device, program, or service that can store secret keys used to sign for cryptocurrency transactions. Its basic function is to store and view cryptocurrencies, but it can also be used for encrypting or signing information.

More About SR&ED Grants Canada

It is important to understand how businesses engaged in innovative technologies like blockchain and cryptocurrency can leverage the SR&ED program.

Access to SR&ED funding can empower small Canadian companies, allowing them to pursue research and experimental development activities that could impact the lives of many Canadians.

Canadian controlled corporations that qualify for the program can earn a refundable ITC of up to 35% of the first $3 million in qualifying expenditures.

For eligible SR&ED costs over $3 million, a 15% non-refundable ITC can be deducted from the tax payable.

Corporations that also meet the criteria of the Canada Revenue Agency are given 15% ITC for eligible costs over $3 million, 40% of which can be refunded.

The SR&ED program is also open to trusts, partnerships, proprietorships, and other corporations. Those with eligible research and development R&D projects can earn up to 15% in non-refundable SR&ED tax credit for all related costs.

The SR&ED program is just one of several innovation grants initiated by the Government of Canada. But it is among the most successful and effective, along with IRAP funding and other programs.

To know how your company can access SR&ED funding, you can talk to our funding experts here at EVAMAX.

We help businesses across Canada identify government grants like the SR&ED program, IRAP, and CanExport.

If you have questions, give us a call or set an appointment through our website.


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.

The COVID-19 outbreak has caused many systems to be put on temporary hold. The new rules of social distancing have put numerous types of services out of business. With new rules only essential businesses are allowed to stay operational. As provinces outline a step by step reopening, weaknesses within many systems are visible.

Dan Breznitz is a co-director at the Innovation Policy Lab at University of Toronto. He says Canada is in for a wake-up call as it will have a problem just selling wood and unprocessed oil.

The unpredictable conditions of this pandemic have forced a lot of international borders to be closed. This has affected trade significantly. Experts predict that the global trade of raw commodities will decline as this pandemic makes the movement of people and goods more challenging.

He adds that the country must work to rebuild its ability to produce sophisticated goods through innovation. Breznitz says, “we no longer can produce the basic things we need in order to survive under a pandemic and we cannot count on global production networks to do that in times of crisis”.

It is evident that the Canadian economy is heavily reliable on international trade partners to provide some essentials for Canadians. He urged that Canada should find ways to support its small and medium sized enterprises during this pandemic. This effort could help them offset the essential items Canada would otherwise outsource. This process could involve some research and development into technologically advanced processes. This also allows research into different fields of science. These efforts can help grow Canadian businesses, especially during this economic recession (https://globalnews.ca/news/6962680/coronavirus-canada-economy-vulnerabilities/ ).

Some provincial governments however already taken some measures to enable Canadian businesses. These measures are to enable businesses to provide required essential items. Specifically, the province of Ontario has started working with Medical Innovation Xchange to support local innovation during this pandemic. Medical Innovation Xchange is Canada’s first industry-led hub for med-tech start ups and it has offered to provide non-medical manufacturing companies support during this pandemic. This support can be useful as they shift and restructure to provide essential supplies for provincial health care facilities and workers.

Through this collaboration, innovation efforts will increase. This increase in innovation could create more jobs and help develop a further independent and domestic medical supply chain for the province of Ontario.

Vic Fedeli, the Minister of Economic Development, Job Creation and Trade added, “Ontario has some of the best and brightest and innovative people in the world and its critical that we leverage that advantage to better prepare for the future. Our governments collaboration with Medical Innovation Xchange members is an example of how we are collaborating with our cutting-edge businesses to solve problems, grow our medical technologies sector and build a safer environment for Ontario’s health care facilities”.

As a part of the same effort, Ontario has also created the Ontario Together Fund
worth $50 millions. Through this small and medium businesses can find funding to shift their operations and innovation efforts to essential items. With these resources, non-medical manufacturing companies can receive funding and advisory services through the Medical Innovation Xchange to help navigate regulatory standards and increase efficiency.

“The Medical Innovation Xchange was founded to help young domestic medical technology companies navigate specific challenges in the healthcare sector. We understand how to be efficient with resources and make the fewest mistakes while accelerating timelines to build critical medical supplies and equipment” says MIX Founder Armen Bakirtzian (https://news.ontario.ca/medg/en/2020/05/ontario-collaborates-with-med-tech-innovation-hub-in-the-fight-against-covid-19.html).

In addition to the Ontario Together fund, the Government of Canada also provides several other programs through which businesses can be enabled to contribute during the pandemic. The most common is the SR&ED tax incentive program. This provides tax credits to businesses that conduct any form of research and development, specifically scientific research and experimental development. The SR&ED program provides over $3 billion in tax incentives to over 20,000 businesses annually. This program, therefore, stands as the single largest federal program that supports R&D in Canada. The SR&ED tax incentives are awarded based on the amount of qualifying expenditures of R&D/innovation projects and efforts.

EVAMAX specializes in getting businesses the most funding possible. To find out if you qualify and to get started on your SR&ED claim, contact EVAMAX today.