What is SR&ED and why make a claim?

The Canada Revenue Agency describes Scientific Research and Experimental Development (SR&ED) as a federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada that will lead to new, improved, or technologically advanced products or processes. By applying, a Canadian-controlled private corporation can earn an investment tax credit of 35% up to the first $2 million of qualified expenditures for SR&ED carried out in Canada. Public corporations and other tax payers are also eligible for credit at a reduced rate.

Additionally, provinces offer supplementary credit with rates varying by province. Together, the federal and provincial R&D tax benefits combine to make Canada's Research and Development incentive program among the most generous on the planet. In the province of Quebec for example, the credit rate varies between 17.5% and 37.5%, which, when added to the Federal credit, could produce total benefits of over 82% for eligible wages and salaries. Qualified expenditures also include materials, machinery, equipment, some overhead, and SR&ED contracts.

Long story short: 

Your company spent $100,000 on eligible projects? Submit a claim, and you might receive cheques for a total sum of over 82,000$. When you know that the credit is non-refundable, there is no need to ask why you should be making a claim. It simply pays to do SR&ED.

Regards,

M

TODAY'S SR&ED DEFINITION:

Canadian-Controlled Private Corporation (CCPC): A CCPC is a special type of Private Corporation that is also a Canadian Corporation. In order to qualify as a CCPC it must not be controlled, directly or indirectly in any manner whatever, by public corporations, non-residents or a combination of the two.

For more information on the SR&ED program, visit www.quadris.ca