In a more traditional environment, like a scientific lab, deciphering what is SR&ED eligible is a fairly simple process. Where things get a bit trickier is in the more alternative-type industries where SR&ED could be hidden. It may take someone with a discerning eye and lots of SR&ED tax credit experience to know where to look. A good example of this type of industry is tool and die.
The tool and die industry may not seem like a likely place for SR&ED, but there are several instances where the activities in a shop may be eligible under the 3 fundamental criteria. During the project, always consider whether one of the following was involved:
When looking at what kind of tool and die projects are eligible, a good frame of reference is to remember the 4M’s: Materials, Machines, Modifications and Methods. Let’s look at this a little more deeply:
In the SR&ED world, tool and die is one of those industries that have the perception of being tricky claims. This is mostly because a lot of the work done may be seen strictly as “standard engineering” or “one-offs”. Another major issue (and this is an issue across the board in SR&ED), is the process for keeping support documentation readily available. However, this is a relatively easy fix by using a SR&ED tracking system throughout the year.
There are plenty of opportunities for tool and die manufacturers to take advantage of possible SR&ED tax credit benefits. If you have any questions about whether or not your tool and die activities are SR&ED eligible, call a BeneFACT Consulting Group consultant today.
*The information above is meant for informational purposes only, and not to be used as financial or legal advice.