It’s no secret that the tech sector in Canada is a vibrant industry. Companies whose technology powers businesses across the world are based in Canada, chief among them ecommerce giants such as Shopify and Lightspeed, software companies such as Constellation Software, and ticketing platforms like Zaui just to name a few.
One avenue available to Canadian tech firms to fund their product development projects is SR&ED, a tax incentive program administered by the Canada Revenue Agency (CRA). Eligible businesses may be entitled to recuperate up to 40% of eligible project costs. You may wonder, however, what projects can a tech company undertake that are eligible for SR&ED? Isn’t SR&ED reserved for scientists wearing white lab coats, completing complex R&D projects? Not quite.
Imagine a hypothetical company developing an advanced machine learning algorithm that enhances the accuracy and efficiency of natural language processing applications. In other words, AI. Such a project would be eligible for SR&ED because it meets a key piece of eligibility criteria; it addresses several technological uncertainties.
There is also a scientific research component, exploring and evaluating various machine learning approaches, including deep learning models and recurrent neural networks. This research will need to be rigorously documented throughout the R&D process, as it will support the case for SR&ED eligibility when submitted to the CRA.
Throughout the project, this hypothetical firm will need to document their eligible expenses as well, including wages of the research and development team, materials and software used for experimentation, and relevant overhead costs directly associated with the project, as these costs will be used to calculate the return they’re eligible to receive.
By providing a detailed account of their project, this firm can demonstrate the scientific and experimental nature of their work, making a strong case for SR&ED eligibility.
The final step is the preparation and submission of the claim to the CRA. Often, this is where businesses run into trouble. For better or worse, the claim process is complicated, and many overextended tech executives simply don’t have the bandwidth to compile the claim and submit it. That’s where we come in. Engaging a qualified SR&ED consulting firm is a great way to reduce the strain on your team, and increase your chances of your claim being accepted by the CRA!
Working with Catax involves zero risk for our clients. The initial assessment takes only thirty minutes. Catax professionals then get to work, thoroughly assessing your business and its unique needs. If we are unsuccessful in identifying an opportunity for you to claim any tax incentives or tax benefits, there is absolutely no charge for our services. That is our promise to you.
If your business operates in the tech sector and has been innovating in the space, drop us a line. We would love to chat! Contact us, or give us a call at 604 629 8863.