3 Ways to Get Better Acquainted with the SR&ED Program

SR&ED Tax Credit Program

Discussing workThe SR&ED Tax Credit Program is all over the news right now, but how much do you really know about it? Did you know that even small companies and start-ups can successfully claim? It’s all about your passion for contributing to innovation in Canada. Even if your project fails, you can STILL submit a claim. There’s so much to learn about SR&ED, but where do you start?

Do Your Research

Knowledge is power – and could mean funds for your company! Now is a great time to explore the inner workings of the Scientific Research and Experimental Development tax credit program as there are a fair amount of media publications discussing the current legislative changes and reviews. Keep your eyes peeled on The Hill Times, The Globe and Mail and The National Post for updates.

Attend a Seminar

If you’re new to the SR&ED process, you may find it extremely daunting to go it alone. You may not even know that getting a tax credit on your project is an option. Learning about SR&ED in a group setting with someone who knows the business inside and out may be the perfect solution for you. A seminar or webinar offers a basic overview of what the program is about.

Call a Consultant

Of course, the best way to get better acquainted with the entire SR&ED Tax Credit program is to call a professional. One of the main complaints about SR&ED is that it is complicated and confusing. A consultant knows what to look for, so nothing is missed. Plus, by having a consulting group handle the paperwork, your employees can concentrate on other tasks within the business.

 

 

SR&ED History in Canada!

Did you know that Industrial tax incentives in Canada have been in place since at least 1944?

  • 1944-1986 Traditional tax deductions and tax credits for R&D are introduced.
  • 1987-1993 Moderated abuses and a more simplified administration introduced.
  • 1994-Present Clarified definition of experimental development, broadened eligibility re: Qualified Small Businesses, allowed proxy calculation for overhead, conducted major review in 1998, simplified forms, conducted major review in 2010.
  • Oct 2011 The Canadian government commissioned an expert panel (The Jenkins panel) to conduct a comprehensive Review of Federal Support to Research and Development.

The SR&ED program is intended to encourage businesses of all sizes, particularly small to medium and start-up firms, to conduct research and development (R&D) that will lead to new, improved, or technologically advanced products, processes, devices, and materials. The Canadian SR&ED tax incentive is the government’s largest single support program for R&D. Each year the SR&ED program provides over $4 billion in investment tax credits (ITCs) to over 18,000 claimants. Of these, about 75% are small businesses.

Don’t let your tax credits go to waste. Contact BeneFACT today for more information on how we can maximize your SR&ED claim.

R&D Project Failed! Now What?

Your Development Project Failed, Now What?

Do you still qualify for SR&ED? One of the common misconceptions about the SR&ED program is that your projects need to be successful to be eligible. In actual fact, projects that have failed often make the best type of SR&ED projects, as they fundamentally meet one of the three eligibility criteria; Technical Obstacle.

Failures are common on the path to technical advancement. Understand and document the failure and all failed methods or attempts. Record what you attempted to do, and what happened as a result. Learn from the failure and then file a SR&ED claim outlining all associated costs of doing that work, if it qualifies. The program allows for these failures to be eligible as an incentive for the government to help reduce the burden of risk on companies who strive to develop new products and processes by reimbursing them for their efforts.

Don’t let your tax credits go to waste. Contact us today for more information on how BeneFACT can maximize your SR&ED claim.

Why Hire a SR&ED Consultant?

Running your own business is hard enough, let alone applying for your SR&ED tax credit. It often seems like more trouble than it’s worth. Filling out all the correct paperwork can be frustrating, time consuming and, if completed incorrectly, may result in your company not receiving the credit you deserve.

A well-established consulting firm like BeneFACT Consulting Group can look at your research and development spending and help in distinguishing what is eligible and what isn’t. We’ll go over everything with you and complete the paperwork.

BeneFACT Consulting Group is Canada’s largest independent Scientific Research & Experimental Development (SR&ED) consulting firm. BeneFACT utilizes market-leading financial and technical expertise to ensure that companies maximize their SR&ED tax credits. With deep experience in General Manufacturing, Information Technology, Food & Beverage, Chemicals and Oil & Gas, Life Sciences & Biotechnology and other fields, BeneFACT is uniquely positioned to provide service to businesses seeking SR&ED tax credits.

At BeneFACT, our consultants have specific industry expertise in a variety of relevant fields and typically hold graduate-level designations or PhDs in applied science and engineering. Our consultants are perfectly positioned to recognize non-intuitive, unclear, often-missed and under-claimed qualifying work which can substantially increase the amount of tax credits claimants receive.

Don’t let your tax credits go to waste. Contact us today for more information on how BeneFACT can maximize your SR&ED claim.

Flaherty’s Decision to Cut SR&ED Tax Credit, Just Wrong!

Jeffrey MacIntosh a Toronto Stock Exchange professor of capital markets at the Faculty of Law, University of Toronto said it well in his recent article in the Financial Post.

“Ill Advised” is what MacIntosh called it, arguing that many of the 20,000 CCPCs taking advantage of the SR&ED tax credit are early-stage firms that reside in what is often called the “Valley of Death” — the capital-starved region sandwiched between government-financed basic and applied research and later-stage private funding by angel investors, venture capitalists, and strategic partners. For many of these seed-stage firms, the SR&ED is the only available source of external funding. Any reduction in the SR&ED will inevitably increase the number of carcasses littering the floor of the Valley of Death.

MacIntosh also disparages the comparative studies between direct assistance and indirect assistance which rely heavily on a study by the federal Department of Finance which found that within five (5) years of incorporation, only 2% of SR&ED recipients grow into large firms that still performed R&D. However, no comparative growth rates are presented for firms receiving direct assistance. Moreover, the pool of firms featured in the Department of Finance study were incorporated in the period from 2000 to 2004 — immediately following the bursting of the tech bubble in 2000. As tech business failures were generally higher in this period, the data relied on is unlikely to be a good proxy for normal growth rates of SR&ED firms. 

Don’t let your tax credits go to waste. Contact us today for more information on how BeneFACT can maximize your SR&ED claim.

 

Contingency Fees – Are They Really A Problem?

Since the release of the 2012 Federal Budget on March 29, 2012, there has been a lot of talk about the concerns regarding contingency fees charged by SR&ED consultants. The government is concerned these so called contingency fees are weakening the benefits of the SR&ED tax incentive. Are they really that big of a problem? The government seems to think so.

In the coming year the government plans to investigate this issue to understand why firms choose to hire SR&ED consultants on a contingency-fee basis, instead of working on the claims themselves. Could one of the reasons be the fact that the process currently in place is so complicated and CRA’s review process has turned off quite a few potential claimants?

Most firms that have a tendency to use SR&ED consultants are SMEs. SMEs usually have limited resources on hand or lack the expertise in the preparation of claims, hence their decision of using an expert. But how do they afford one?  This is where the contingency-based fee helps!

A contingency fee is any fee for services provided where the fee is payable only if there is a favourable result.  So, it’s great news for the firms who don’t have the funds to pay right away. Why would you want to take away the one thing that actually helps SMEs? If there was a set fee charged no matter the outcome, how many SMEs do you think would be able to afford an expert? And in that case, would they even claim SR&ED at all? And let’s not forget about the fact that SR&ED consulting firms generate significant levels of employment for highly qualified Engineers, PhDs etc. So why change something that seems to be working for everyone?

Don’t let your tax credits go to waste. Contact us today for more information on how BeneFACT can maximize your SR&ED claim.

 

Common Questions Asked: What Businesses Qualify for SR&ED?

Scientific Research and Experimental Development (SR&ED) detailed in subsection 248(1) of the Income Tax Act can be summarized as: …systematic investigation or search carried out in a field of science or technology by means of experiment or analysis . . . to advance scientific knowledge or to achieve technological advancement.

Therefore, any Canadian business operating today, meeting the criteria above is eligible for the SR&ED tax credit. The question now is how much are you eligible for? Contact BeneFACT Consulting Group today to find out more.