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WHAT IS R&D REFUNDS (SRED) PROGRAM?

When we hear R&D, we think of a science lab or white coat or NASA! Fortunately, SR&ED (SRED) program is applicable far beyond this imagination and in fact is a hidden source of financing for your company.

To encourage businesses to undertake Scientific Research and Experimental Development (SR&ED) activities in Canada, the Federal Government provides one of the most generous R&D cash refund / tax incentive programs in the world.

The program is more technical than financial.

In combination with various provincial programs, companies may recover up to 68% of the qualified cost. And EVAMAX can help you to recover those costs.

This program also goes by various names such as SR&ED or SRED, R&D (Research & Development) Tax Credit, Research Tax Credit, R&D Credit, Research & Experimentation Tax Credit, Investment Tax Credit, R&D Funding.

SRED Overview

These tax incentives come in three forms: a reduction of taxes, an investment tax credit, or a cash refund.

This program is the largest federal program that supports R&D in Canada. In fact, the program provides more than $3 billion in tax incentives to over 20,000 claimants each year.

The program provides SRED tax incentives for three types of research:

  • Basic Research

    Work done to advance scientific knowledge without any practical application in mind.

  • Applied research

    Work done to advance scientific knowledge specifically for a practical purpose.

  • Experimental development

    Work done to achieve a technological advancement to create new or improve existing products or processes.

The work has to be done in Canada and can be done either by the company itself or on behalf of the company by another party such as a contractor or research institute.

Myths and Facts About SRED

MYTHS

FACTS ABOUT SR&ED PROGRAM

It is for high tech sector and for lab coat R&D only —so I can’t claim any benefitAny industry can get the benefit of the SR & ED program as long as there has been an attempt for a technological improvement/advancement. These benefits include not only the research cost but also wages, capital expenditures and overheads.
It has benefits for larger corporations and not small businesses.It has more incentives for small companies then larger corporation.
Our R&D work was not successfulYou can get a refund even if the experimentation failed.
I don’t pay taxes, how can I get a credit?You can get a refund even if you have not paid taxes or declared loss.
We spent a lot of money on experimental projects but didn’t make the sale.It is about expenditure…NOT sales.
I don’t have time for all the paperwork involved in claiming SR&ED benefits. My accountant never mentioned about it to me either.The program is more technical than financial. Specialists at EVAMAX can simplify the process by taking the paper chase off your shoulders.

What Qualifies for SRED?

If you are a Proprietorship, a Partnership, or a Corporation carrying on a business in Canada and conduct any of the following activities it is likely that your company qualifies under the SR & ED program:

  • New formulations, new designs, innovations
  • Methods to make products cheaper/faster/better/durable
  • Risk, uncertainty, unproductive time or material
  • Enhancements, efficiency issues, new product development
  • Material changes, inconsistent product or quality issues
  • Reduction in labor and resources needed to make the product
  • Integration issues, new algorithms, software structures and tools

Based on the type of entity, you may qualify for the following benefits:

  • Canadian-controlled private corporations (CCPC)

    Private companies controlled by Canadian ownership can earn a refundable tax credit up to 68% on qualified SR&ED costs.

  • Other corporations

    Public companies or Private companies not controlled by Canadian ownership can earn a tax credit up to 30% on qualified SR&ED costs that can be applied to reduce taxes payable.

  • Individuals and trusts

    Individuals (proprietorships) and trusts can earn a refundable tax credit up to 30% on qualified SR&ED costs.

  • Members of a partnership

    Since a partnership is not a taxpayer, it cannot earn a tax credit itself on SR&ED. The members of the partnership, however, can claim SR&ED tax credits. They do so by claiming SR&ED at the partnership level and then allocating the credit to the individual partners who can then claim it on their personal income tax returns.

What costs are claimable?

  • Salary or wages of employees involved in SR&ED
  • Materials scrapped in performing SR&ED
  • Contract Expenditures for SR&ED Performed on behalf of the company
  • SR&ED Overhead expenditures
  • Third-party payments

What does not Qualify?

  • Market research or sales promotion
  • Quality control or routine testing
  • Research in the social sciences or the humanities
  • Prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas
  • Commercial production or use of a new or improved material, device or product
  • Style changes
  • Routine data collection

WHY TALK TO US?

  • Have faced challenges with SR&ED Reviews or Objections?

  • You’ve been successfully claiming SR&ED incentives but want to get a Second Opinion?

  • Not sure if you are Maximizing your Benefits? Never heard of SR&ED Program?

  • Think it’s too much paper work for you to Fund your Innovation? Think again.

  • How much cash are you leaving on the table?

OUR APPROACH TO MAXIMIZE BENEFITS FOR OUR CLIENTS IS:

  • WE DO NOT USE A “ONE FORMULA FITS ALL” POLICY.
  • WE ASSIGN INDUSTRY SPECIALISTS TO WORK WITH YOU. THIS ENSURES SUCCESSFUL IDENTIFICATION OF ELIGIBLE PROJECTS AND COSTS.
  • WE PROACTIVELY WORK WITH OUR CLIENTS TO ENSURE OVERALL HEALTH OF THE CLAIMS IN THE CURRENT & FUTURE AS WELL.

To schedule a no obligation consultation

Learn More about the SRED Program & How EVAMAX can help Maximize benefits through the program

For assistance in preparing your submission and to position your application for approval contact EVAMAX Group to help you with the process. You may also email us at info@evamax.com or call 1-877-711-7733.