Tax Tips Category

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Understanding SR&ED claims for your tech company

What is SR&ED?

SR&ED (Scientific Research and Experimental Development) program is designed to encourage Canadian businesses of all sizes to conduct research and development in Canada that will lead to new, improved, or technologically advanced products or processes.

If you are involved in R&D you can claim expenditures such as wages, materials, machinery, equipment, some overhead and SR&ED contracts.

What kind of projects qualify?

To qualify for the SR&ED program, work must advance the understanding of scientific relations or technologies, address scientific or technological uncertainty, and incorporate a systematic investigation by qualified personnel.

Work that qualifies for SR&ED tax credits includes:

  • experimental development to achieve technological advancement to create new materials, devices, products, or processes, or improve existing ones
  • applied research to advance scientific knowledge with a specific practical application in view
  • basic research to advance scientific knowledge without a specific practical application in view
  • support work in engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research, but only if the work is commensurate with, and directly supports, the eligible experimental development, or applied or basic research.

The deadline may be approaching fast!!

You must file the applicable prescribed forms by your reporting deadline. The reporting deadline for corporations is 18 months (17.5 months for individuals) from the end of the tax year in which you incurred the expenditures.

How can LedgersOnline help you?

LedgersOnline staff will work with you to keep your bookkeeping up to date so you can file accurately and on time, therefore maximizing your return. Our professional qualified accountants will provide you with the advice you need.

Additional information about the SR&ED program can be found in the following articles:

Don’t Miss Out on the SR&ED Tax Credit Program:

http://sbinfocanada.about.com/od/taxinfo/a/SREDtaxcredit.htm

CRA: Scientific Research and Experimental Development Tax Incentive Program
http://www.cra-arc.gc.ca/txcrdt/sred-rsde/menu-eng.html

(Sources CRA and About.com)


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