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.
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.
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.
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 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.
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.
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.