The Scientific Research and Experimental Development (SR&ED) program is a tax incentive initiative managed by the Canada Revenue Agency (CRA). It allocates over $3 billion each year to Canadian businesses for their efforts in tackling technological challenges and enhancing their technological expertise.
Similar to other tax incentive programs, the SR&ED is regulated by the Income Tax Act. The definition of SR&ED describes it as “…a systematic investigation or inquiry conducted within a scientific or technological domain through experimentation or analysis… aimed at advancing scientific knowledge… or achieving technological progress to create new materials, devices, products, or processes, or to enhance existing ones, including incremental improvements.”
You might be wondering, “My company has faced technological challenges; how can we benefit from this valuable program?” In this SR&ED guide, we will explore the specifics of what qualifies your projects for SR&ED by examining the reasons behind the work and the methods used to carry it out.
Identify the Reasons for Initiating the Project
In many instances, your business project necessitates the initiation of a development project, and these development activities are crucial when evaluating SR&ED eligibility. For a development project to qualify under SR&ED, you must have faced a scientific or technological uncertainty that you could not resolve using your existing knowledge or by applying publicly available solutions to your specific problem.
To be eligible for SR&ED, ensure that your project meets the following criteria:
- There is a knowledge gap between your project’s starting point and its objective.
- You cannot bridge this gap with your current knowledge or available public resources.
This is the fundamental purpose of SR&ED: to advance science or achieve technological improvements by closing this gap and gaining new insights. Clearly communicate that there was a limitation in the existing scientific or technological understanding that could not be addressed through established methods. This will help meet one of the key requirements for your project to be recognized as SR&ED.
Applying for SR&ED Tax Credits
With this newfound understanding, if you have participated in business or development projects that advanced science or technology (the rationale behind your work) using a systematic and logical approach (the methodology of your work), you may qualify for SR&ED. Let the experts at Digitize Media Corp, assist you in identifying those SR&ED projects so your business can take advantage of the SR&ED program and enhance its competitiveness in the market.
If your business is looking for help with applying for Canadian government tax credits, grants, and wage subsidies, the team of SR&ED consultants and government funding application specialists at Digitize Media Corp. can guide you through the application process to ensure it is as straightforward as possible. Contact us today (780) 446-4543 to determine your business’s eligibility for funding.
