What is SR&ED?
The Scientific Research & Experimental Development (SR&ED) Tax Credit Program is known for its incredibly attractive tax credits, making it one of the most lucrative programs globally. Every year, it provides over $3 billion in funding to support Canadian business innovation, benefiting more than 20,000 claimants annually. This tax incentive program encourages companies engaged in Research & Development (R&D) activities within Canada by offering three types of tax incentives: income tax deduction, investment tax credit (ITC), and often, the possibility of a refund. It is managed by the Canada Revenue Agency (CRA) and is Canada’s largest federal program dedicated to fostering innovation.
Companies of all sizes can qualify to receive SR&ED credits as R&D work can be easily integrated into everyday business activities. Contrary to popular belief, the SR&ED program is not limited to state-of-the-art laboratories. So, if your company’s employees are working on solving technological problems for which no existing solutions are available, chances are their work is eligible for SR&ED credits.
You may already be engaged in activities that qualify for the SR&ED program, such as:
- Undertaking the creation of new software, either for your own business or for your clients.
- Engaging in the development of a new manufacturing process or product.
- Striving to improve your competitive advantage in the market.
- Conducting activities related to engineering, design, modeling, data collection, testing, or any form of new development work.
- Engaging in the development of innovative solutions.
- Incurring costs related to a project, prototype, or process that remains unfinished due to technical obstacles.
- Focusing on enhancing existing products or processes.
- Enhancing current technology through research and development efforts.
These examples demonstrate the wide range of activities that can potentially qualify for the SR&ED program, allowing you to explore various avenues for claiming tax credits.
Who qualifies for SR&ED credits?
For-profit companies based in Canada who are:
- Undertaking basic and applied research initiatives
- Engage in experimental development
Forward-thinking companies have the ability to transform disruptive forces into impactful new solutions, products, and services. By understanding the numerous benefits of SR&ED and incentives, you can unlock both financial resources and time to fuel innovation. Litvin Muir offers comprehensive assistance in managing various aspects of your business, including SR&ED, tax credits for e-business, capital cost recovery, and other relevant programs. This holistic approach helps streamline operations, accelerates the process, and liberates funds, empowering your organization to maintain a competitive edge and remain agile in the ever-evolving business landscape.