How Do I Qualify for SR&ED?

You might be surprised by what is eligible for SR&ED tax incentives. Innovation incentives are not just for people who wear lab coats anymore. Activities that qualify as tax-incentivized research and development are being carried out in almost every industry, including manufacturing, construction, architecture, engineering, research & development, transportation, agriculture, food and beverage, hospitality, IT, HR, and many others. Whether it’s a new material, a new food product ingredient, or an improvement to an existing product or process, it might be eligible for SR&ED.

To qualify for SR&ED, a business must meet the following criteria:

• Technological Advancement: The R&D work must involve the development of new or improved technologies, materials, products, or processes.
• Technological Uncertainty: There must be technical uncertainties that the project aims to address. This means that the knowledge or capability to achieve the desired outcome must not be readily available or deducible by a competent professional in the field.
• Methodology: The work must be carried out using systematic and logical approaches that follow a predetermined method. This means that the R&D work must be documented in a systematic and organized manner, and the results must be recorded and analyzed.
• Technical Competence: The business must demonstrate that it has the necessary technical expertise to carry out the R&D work.

It’s important to note that a project does not need to be “succesful” for it to be eligible for SR&ED incentives. The SR&ED program is designed to encourage businesses to take risks as it pertains to innovation in Canada. The Canadian government encourages R&D activities that may lead to technological advancements and innovation, even if the projects do not result in commercial success.

What expenses qualify for SR&ED?

Once the R&D project activities have been completed, its time to apply for SR&ED. A range of expenditures are eligible to be claimed, including; salaries & wages, materials, overhead, contract expenditures and capital expenditures.

What expenses are not eligible for SR&ED?

Costs pertaining to marketing, market research and quality control, for example, are not eligible for SR&ED incentives.

How do I apply?

Once R&D activities have been completed and materials have been gathered, the business must prepare its SR&ED claim. Claim preparation includes a description of the SR&ED work, the objectives, the methodologies used, and the eligible costs incurred. Businesses commonly work with a qualified SR&ED consultant or tax professional to prepare their SR&ED claims and maximize their tax incentives.

That’s where we come in. As professionals in the SR&ED application process, we can review your projects, determine which ones may be approved for SR&ED funding, and prepare and submit your claim for you. Entrusting Catax with your SR&ED claim is risk free for your business; we only get paid when your claim is approved.

Call us toll-free at 604 629 8863, or contact us today.