SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT (SR&ED)
Do you encounter technical uncertainties in the course of running your business?
Do you do research or develop solutions to overcome these uncertainties?
You may be eligible to recover up to 64% of your expenditures.
At OMNI, we specialize in managing SR&ED claims to help you claim and receive all that you are entitled to.
WHAT IS THE SR&ED PROGRAM?
In the expanding global world of business, it is essential for businesses small and large to continue to innovate and advance to stay ahead of the competition.
The Scientific Research and Experimental Development (SR&ED) incentive tax program is a program developed by the Canadian government in order to promote research and development (R&D) performed in Canada. It is available to businesses of all sizes and in all sectors. More than $3.5 billion dollars are reimbursed annually to individuals and companies who perform SR&ED in Canada.
WHAT ARE THE ADVANTAGES OF CLAIMING SR&ED?
There are two main advantages of the SR&ED tax incentive program:
SR&ED expenditures can be deducted from your income for tax purposes, or can be carried forward indefinitely.
SR&ED Investment Tax Credits (ITCs) can be used to reduce income tax payable, or may be refunded. This is the best advantage, as ITCs may be obtained as cash refunds, which can significantly boost the cash positions of small businesses.
WHO CAN CLAIM SR&ED ITCS AND HOW MUCH IS IT WORTH?
Any person or business who performs SR&ED in Canada is eligible to claim SR&ED ITCs. The calculation of credits is based on the amount of qualified expenditures incurred and may be worth up to 64% in BC and Alberta.
Canadian-Controlled Private Corporations (CCPC) can earn a refundable ITC of 35% on qualified SR&ED expenditures, up to a maximum of $3 million in expenditures, in addition to a provincial credit of up to 20% (in BC and Alberta, the rate is 10%). Above this threshold, CCPCs can earn ITCs at a non-refundable rate of 15%, and, for certain qualifying corporations, 40% of ITCs earned at 15% may be refundable.
Other corporations can earn a non-refundable ITC at 15% on qualified SR&ED expenditures.
BC corporations may also earn a 10% refundable tax credit on the first $3 million in expenditures.
WHAT TYPE OF WORK QUALIFIES FOR SR&ED INCENTIVES?
To qualify as SR&ED, the work must meet the definition of SR&ED under the Income Tax Act (ITA) subsection 248(1).
Generally, there must be a “systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis.”
Have you designed or developed new software?
Are you involved in basic research, without a specific practical application in view?
Have you performed work to advance specific scientific knowledge?
Have you performed work for the purpose of creating new or improving existing materials, devices, products, or processes?
Have you encountered technical roadblocks while creating or expanding a process, project, or prototype?
If you answered Yes to any of the above, your business may be eligible for SR&ED Incentive Tax Credits.
Contact us for a complimentary consultation. OMNI will review your projects in detail to determine your eligibility and to provide an estimate of your potential income taxes recoverable.
DOES THE INDUSTRY THAT MY BUSINESS IS IN QUALIFY FOR SR&ED INCENTIVES?
SR&ED claims are made in many different industries. It is not the industry that matters, but whether there was a technical uncertainty that your company encountered and whether your company performed SR&ED in attempting to achieve a technical advancement. The uncertainty may be found in a process or as the end product of manufacturing, for example.
Some examples of industries that have successfully claimed SR&ED:
Software or application developers
Geotechnical or environmental engineering
This list is not exhaustive. OMNI will analyze every business independently for SR&ED potential. Get in touch with us for a free consultation to see if your business can qualify to claim SR&ED ITCs.
WHAT TYPE OF EXPENDITURES CAN I CLAIM?
If the work that you performed qualifies as SR&ED, you can claim the following qualified expenditures relating to your SR&ED work:
Salaries or wages
Overhead and other expenditures
Third party payments
Generally, the work must be performed in Canada; however, there are exceptions. Get in touch with us to maximize your claim.
HOW DO I MAKE A CLAIM?
Your SR&ED claim must be filed within 18 months of the end of your fiscal year and must include both a technical report and the financial claim form. The claim can be filed along with, or subsequent to, your normal tax filing obligation.
Documentation to support your claim should be contemporaneous – that is, gathered at the time that the SR&ED was performed. Our financial and technical consultants can review your processes and recommend best practices for documenting your claim.
HOW OMNI CAN HELP
OMNI provides SR&ED consulting services for businesses, accounting firms, and SR&ED consultants. We will fully integrate your SR&ED claim into your financial reporting records and you can rest assured that it will be done right.
OMNI can manage your entire claim process from start to finish or provide directed advice. From writing and review of the technical report, to recommending best practices for contemporaneously documenting your SR&ED expenditures, to audit support of financial and/or technical reviews conducted by the CRA, we have the knowledge and experience to help you maximize your income tax refund and recover expenses spent on research and development.
We will identify eligible projects through isolating technical uncertainties and consideration of your advancements in order to position your business to claim all that you are entitled to. We have technical consultants who are engineers, PhD designated, or who are otherwise experienced in the claim process for SR&ED.
We provide a results-based service. There is no upfront cost and no risk to you. You only pay us when your claim is successful.
Get in Touch with OMNI for a free SR&ED evaluation to determine how much your business can recover in expenditure costs.