Claim SR&ED Tax Incentives Explained
Did you know that the Canadian government offers many beneficial programs to organizations or individuals who conduct research and development activities in Canada? The purpose of these programs is to encourage people and businesses to innovate and create new products that benefit society. The SR&ED tax credit is one business assistance program administered by federal and provincial governments to encourage and support organizations to undertake research and development (R&D) activities that they may not be willing or able to attempt otherwise. To help make your life easier, Sabeeh Naseer, a leading chartered professional accountant, wants to help you learn more about how you can claim SR&ED tax incentives to help your business grow.
SR&ED refers to the Canadian government’s “Scientific Research and Experimental Development” program. This program rewards individuals and businesses of all sizes for conducting research and development activities in Canada. Many companies fail to make an SR&ED claim because they believe that the program is restricted to bigger and high-tech companies. In reality, any company might have its hands in SR&ED activities at any given time. If you or your employees are engaged in solving scientific or technological problems for which a solution is not obvious and easily available, there is a high chance that the work being conducted is fully or partially eligible for SR&ED credits. If you have developed a new product or improved an existing product, you might qualify as well!
If you are still unsure about your qualification for the SR&ED credits, ask yourself these questions:
1. Does your project have technological uncertainties?
2. Does your project offer technological advancements?
3. Does your research result in scientific or technical content?
If you answer “yes” to any of these questions, you could be eligible for SR&ED credits. It is important to keep in mind that SR&ED credits are always a percentage of the amount spent on R&D activities conducted in Canada. Therefore, if you or your business does not spend much money on it, it won’t be eligible for much in credit form.
SR&ED credits are paid depending on the type of profitability of the individual or business applying for the credits. In some cases, the credits are refundable. The government basically issues a cheque for the credit after deducting any taxes due. In other cases, the credits are non-refundable. This means the credits can only be used to reduce past or future tax liabilities. Depending on the type of business you have, the means of receiving payment will differ.
The SR&ED program includes a rigorous regulatory regime which means you need to focus on thorough eligibility assessments and substantiation of claims.
As a leading chartered professional accountant, Sabeeh Naseer aims to help you secure the benefits from government incentives you are entitled to. If you are interested in securing the SR&ED program, give me a call at (604) 773-0910 or email me at info@naseercpa.com so that I can guide you accordingly.
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