When running a business, one of the most important things you own is your IP (Intellectual Property). When you create products, you want the world to know that those products belong to you. But it’s not just a matter of pride, but also of legality and even how much SR&ED credits you can claim. Just how important is it to own the IP? We discussed this a bit in a prior blog post about the danger of double dipping, but it’s definitely worth it to take another look.
First and foremost, it’s important to remember:
This also means the money or benefits from SR&ED. In the world of SR&ED, two companies can’t claim on the same project. Whoever owns the IP gets the credits – simple as that. The real problem seems to occur when an agreement is made with arm’s length subcontractor. When hiring someone to manufacture or design elements of your project, make sure you have in writing who owns the IP – ideally you. When writing up a contract at the beginning of the project, include a clause that you will own the IP and you will be claiming the credits. That way, if there is any discrepancies down the road you have a safety net.
Remember: no ITC recapture when IP is sold or converted to commercial use.
One of the concerns we have heard here at BeneFACT is that of keeping a company’s IP information safe. Whenever you are working with highly classified information – blueprints and designs that shouldn’t be seen by competitors – there’s always a tendency to want to keep these hidden. During the SR&ED process, both those working on the claim and the CRA require access to these documents to fully assess the claim. No need to worry: At BeneFACT we keep all claims in a locked room with specialized access, and the CRA has its own set up privacy rules to abide by.
Fully knowing your rights and how to protect t yourself when dealing with intellectual property is extremely important when it comes to maximizing your SR&ED credits. It may not be a comfortable conversation to have, but it’s an important one to have.