Important Information Important Information About the SR&ED About the SR&ED

ProgramProgram

What Is It?What Is It?

SR&ED stands for Scientific Research and Experimental Development.

The SR&ED program is a tax incentive program available to Canadian businesses that are involved in research and development.

How Much Is Available?How Much Is Available?Each year, the SR&ED program provides over $4 billion to Canadian businesses and organizations in the form of investment tax credits.

Approximately 75 percent of the organizations that apply for the credit are small businesses, and countless businesses that are eligible for the program don’t even bother applying.

Who Qualifies?Who Qualifies?

Basically, any business or organization that conducts R&D inside Canada may qualify for the program. However, not every action that seems like R&D is actually SR&ED. The Canada Income Tax Act outlines what types of research qualify and what types don’t make the cut.

These Are Considered SR&EDThese Are Considered SR&ED

Basic research that’s designed to advance scientific knowledge without a specific practical application.

Experimental development that’s designed to achieve technological advancement by creating materials, products and processes.

Applied research that’s designed to advance scientific knowledge and does have a specific practical application.

More SR&ED Qualified WorkMore SR&ED Qualified Work

Support work or research that falls into one of the following categories may also qualify:

Mathematical Analysis Operations Research Design Engineering Data Collection Testing Computer Programming Psychological Research

These Are Not Considered SR&EDThese Are Not Considered SR&ED

Basic quality control.Routine material, product, device and process

testing. Standard market research or sales promotion.Social science research.Basic data collection.Commercial production or use of new or improved

devices, materials, products or processes. Drilling, exploring or prospecting for natural gas,

petroleum or minerals.

The Reason for the ProgramThe Reason for the ProgramThe Canada Revenue Agency (CRA) created the program to act as an incentive for different businesses to conduct meaningful research and development. The hope is for Canadian businesses to be at the forefront of advances in many different industries.

How to ApplyHow to Apply

To apply for the SR&ED tax credit, you must send in the appropriate forms with your income tax return. First, you need form T661, then for a corporation, you also need to send a T2SCH31. For individuals the extra form is T2038.

Starting from the end of the tax year that the expenses were incurred, corporations have 18 months to file and individuals have 17.5 months.

Expenditures to IncludeExpenditures to Include

If your specific research meets the criteria, you can include the following expenditures. Materials Contracts Salaries and wages Overhead Leasing equipment expenses Capital expenditures Third-party payments

Claims are usually processed between 120 and 365 days after they are received by the CRA.

Additional Info. Additional Info. When filing a claim for SR&ED credit, sending the following information may help speed up the process:Financial or technical documents that pertain to the claim.Contact information of a technical person and financial person in the organization that’s familiar with the research and expenditures. It’s also wise to respond as fast as possible to any requests for more information.

Further Information…Further Information…

SR&ED One Canada is an economics development program that offers support to businesses that have a problems to solve. Visit us today at http://www.sredone.ca/ to learn more.