webinar: the do's and don'ts of claiming sr&ed tax credits

THE DO’s AND DON’T’s OF CLAIMING SR&ED TAX CREDITS

Webinar Presented by Jeff Christie, Partner, Boast Capital    

WEBINAR OUTLINE §  Do I qualify? §  What can I claim? §  How do I calculate my potential return? §  What do I have to document? §  How does the CRA Review claims? §  How long does it take to process my claim? §  What should I consider when claiming? (The Do’s) §  What should I avoid? (The Don’t’s) §  I’m ready to claim. Now what?

WHAT IS SR&ED?

APPLICABLE INDUSTRIES

QUALIFYING CRITERIA

Must meet three criteria to qualify for SR&ED:

ELIGIBILITY The CRA’s 5 questions: 1.  Was there a scientific or a technological

uncertainty that could not be removed by standard practice/engineering?

2.  Did the effort involve formulating a hypothesis

specifically aimed at reducing or eliminating the uncertainty?

Continued…

ELIGIBILITY 3.  Was the adopted procedure consistent with the

total discipline of the scientific method, including formulating, testing, and modifying the hypothesis?

4.  Did the process result in a scientific or

technological advancement? 5.  Was a record of the hypothesis tested and

results kept as the work progressed?

WHO QUALIFIES?

SR&ED BENEFITS Return rates for SME CCPCs:

SR&ED BENEFITS Return rates for non-CCPCs:

CALCULATING ITCs

CASE STUDY

§  SME software company in Vancouver (considered a CCPC)

§  4 developers (1 front-end, 3 back-end)

§  Salaries are $75K per year and 75% of time is eligible

CASE STUDY

§  Front end development not typically eligible §  Eligible expenditure pool for salaries would be $169K

($75K x 3 x 75%) §  Proxy overhead method and CCPC rates of return §  ≅$109K worth of investment tax credits (ITCs)

USING SR&ED TO GROW

Since it’s an SME, ~109K of ITCs = $109K Cash

That’s $327K of ITCs generated over 3 years if the R&D expenses remain the same.

DOCUMENTATION

§  Documented at the time the work was completed §  Technical obstacles or challenges §  Dated

WHAT TO DOCUMENT?

§  Technical §  Time Tracking §  Financial

WHEN TO CLAIM?

18 Months Past Fiscal Year End § Current Claim = Within 6 mo §  Amended Claim = Within 7 to 18 mo

TURNAROUND TIMES

From receipt of a complete claim:

§ CCPC Current Claim – 4 months § CCPC Amended Claim – 8 months § Non-CCPC Claim – 12 months

CRA REVIEWS

CRA Review ≠ Tax Audit Multiple types of Reviews:

§ Desktop §  Financial §  Technical & Financial §  First Time Claimant Advisory Service (FTCAS)

THE DO’s

Do: §  Pay yourself and staff §  Start time tracking and proper

documentation now §  Incorporate your company and

ensure clear IP ownership

THE DON’T’S

Don’t: §  Underestimate the importance

of documentation §  Focus on the business

opportunity §  Leave your SR&ED claim until

the last minute

READY TO CLAIM?

WHO IS BOAST CAPITAL?

We are:

§  Highly reputable §  Technology-

focused §  Efficient §  Well-connected

JEFF CHRISTIE PARTNER 403 589 2809 | jchristie@boastcapital.com BoastCapital.com | @BoastCapital | @ChristieLuge For more info on R&D tax credits and other innovation funding programs, subscribe to our newsletter.