FAQS
At Sredible Inc., we understand that the SR&ED process can seem complex. To help, we’ve answered some of the most frequently asked questions below. If you have any further inquiries, don’t hesitate to reach out to us.
The Scientific Research and Experimental Development (SR&ED) program is a tax incentive program offered by the Canadian government to encourage businesses to conduct R&D in Canada. It provides tax credits or refunds for companies that are working to resolve technological challenges or uncertainties through innovation, development, or experimentation.
Projects that involve scientific research or technological development aimed at overcoming uncertainty may qualify. Examples include:
Developing new software, materials, or products.
Experimenting with new algorithms or processes.
Modifying or improving existing technologies to overcome specific limitations.
It’s important that the project involves technological uncertainty, meaning the outcome was not readily predictable using standard methods.
Your company may be eligible if it:
1. Conducts R&D activities within Canada.
2. Engages in systematic investigation or experimentation in a field of science or technology.
3. Faces technological challenges that can’t be easily solved using existing knowledge or standard practices.
Whether you’re a startup, small business, or large corporation, you can potentially benefit from SR&ED if you’re involved in innovation and development.
The amount you can claim depends on several factors, including the size of your company, your R&D expenditures, and your location. Canadian Controlled Private Corporations (CCPCs) can receive up to 35% of eligible expenses in federal tax credits, while other companies may receive up to 15%. Additionally, many provinces offer their own SR&ED tax credits on top of federal incentives, which can further increase the total amount.
Eligible SR&ED expenses include:
1. Salaries and wages for employees working on the R&D project.
2. Materials and supplies used in experimentation or product development.
3. Contractor fees for external specialists involved in the project.
4. Overhead and indirect costs related to R&D activities (e.g., utilities, rent, software licenses).
5. Prototype development costs, when applicable.
Indirect costs can also be claimed using the proxy method, which allows you to include a portion of salaries as a proxy for indirect costs.
The process varies depending on the complexity of your R&D activities and the amount of documentation required. At Sredible Inc., we aim to streamline this process and typically prepare a claim in 4-6 weeks. This includes gathering technical and financial data, writing the technical reports, and completing the necessary CRA forms.
Proper documentation is key to a successful SR&ED claim. You will need:
1. Detailed records of your R&D activities, including timelines, challenges faced, and solutions attempted.
2. Financial records, including invoices, payroll records, and receipts for materials and services.
3. Technical reports outlining the technological uncertainties and advancements your project achieved.
Our team can help ensure that your documentation is audit-ready by organizing and preparing it in line with CRA requirements.
Technological uncertainty is a core requirement for SR&ED eligibility. It refers to situations where the outcome of an R&D project is not readily known or cannot be achieved using existing knowledge or standard practices. This uncertainty could be related to the performance, development, or integration of new technologies.
The CRA places significant emphasis on technological uncertainty, as it shows that your project involved true R&D and wasn’t just routine work.
At Sredible Inc., we handle the entire SR&ED process for you, from assessing eligibility to submitting the claim. Here’s how we simplify it:
1. Initial consultation: We provide a free discovery call to assess your project’s SR&ED eligibility.
2. Data collection and automation: We use cutting-edge tools to integrate with your project management and accounting systems to gather all necessary data.
3. Expert claim preparation: Our SR&ED experts will write the technical reports and ensure all eligible costs are included.
Ongoing support: We provide audit defense and offer ongoing consultation to help you structure future R&D projects for maximum claim potential.
Yes, you can still apply for SR&ED even if you’ve received other government grants, such as IRAP or provincial incentives. However, it’s important to note that certain amounts from other government funding may need to be deducted from your SR&ED claim. Our team can help ensure that your claim is properly calculated and compliant with CRA rules.
If your SR&ED claim is audited by the CRA, it means they require additional documentation or clarification to support your claim. At Sredible Inc., we provide full audit defense services, ensuring that you’re well-prepared. We will:
1. Respond to CRA inquiries on your behalf.
2. Provide detailed documentation to support the claim.
3. Help resolve any issues or discrepancies quickly.
Our goal is to minimize disruption to your business and ensure your SR&ED claim remains intact.
In addition to federal SR&ED credits, many provinces offer their own tax credits to further encourage R&D. For example:
1.Ontario offers an 8.5% credit on top of the federal credit.
2. Quebec provides a generous 14.5% credit.
3. British Columbia offers a 10.5% credit.
Each province has its own rules and rates, and we can help ensure your claim takes advantage of both federal and provincial credits for maximum benefit.
It’s easy to get started with us! Simply book a free discovery call where our experts will assess your eligibility, discuss your R&D projects, and outline the next steps. From there, we’ll take care of the entire SR&ED claim process for you.
Contact us today to get started and maximize your SR&ED tax credits!