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Everything You Need to Know About SR&ED Tax Credits

EVERYTHING YOU NEED TO KNO W ABOUT SR&ED TAX CREDITS WHAT ARE SR&ED TAX CREDITS? SRGED SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT S-H-R-E-D 95% Canadian Research and Commonly pronounced Approximately 95% of SR&ED Development Tax Credit "SHRED" claims are considered Experimental Development $3.6 BILLION IN 2012 The Canadian government provided more than $3.6B to over 23,000 companies under the SR&ED tax credit program. SRGED TAX INCENTIVES = INVESTMENT TAX CREDITS (ITCS) %3D WHO CAN CLAIM SR&ED? 3 WAYS TO IDENTIFY SR& ED ELIGIBILITY tt Technological Advancement Technological Uncertainty Technical Content Technology, characteristic, or capability does not currently exist and is not readily available in standard practice. A qualified person overcame challenges and could not The work was performed in a systematic or iterative process predict the outcome with their with documentation. existing knowledge. APPLICABLE INDUSTRIES Software Manufacturing Bio Technology Development & ICT Oil & Gas and Agriculture ETC and more Energy WHAT CAN YOU CLAIM? TYPES OF COMPANIES THAT CAN CLAIM CCPC Canadian Controlled Private Corporation NON-CCPC Foreign and/or Publicly Owned Corporation SME - smoll-medium sized enterprise generating less than $500K of net income per fiscal year RECOVERABLE AMOUNTS ON QUALIFYING EXPENDITURES CCPC AND SME SALARIES SUB-CONTRACTORS MATERIALS -64% -32% ~40% REFUNDABLE ITCS NON-CCP COR LARGE CCPC SALARIES SUB-CONTRACTORS MATERIALS -36% -18% ~28% 2070 NON-REFUNDABLE ITCS DID YOU KNOW Unused non-refundable ITCS may be carried back three years or carried forward 20 years if they were earned in tax years ending after 1997 CASE EXAMPLE SR&ED'S IMPACT ON YOUR BOTTOM LINE Company X has -$210K/YEAR of eligible SR&ED expenditures. Claiming SR&ED, the company can earn -$135K OF REFUNDABLE ITCS/YEAR THAT'S THE EQUIVALENT OF 2 EMPLOYEES THAT'S $ 405 K OF ITCS IN JUST 3 YEARS! "ITC calculation based on: CCPC in Alberta (10% provincial rote): 2014 fiscal year expenditures, spent 100% of time on R&D (64% recoverable amount for salaries) WHEN SHOULD YOU CLAIM? TURNAROUND TIMES DEADLINE TO CLAIM SR&ED - 18 MONTHS PAST FISCAL YEAR END CURRENT FILING AMENDED FILING Filed within Filed within 6 MONTHS OF FISCAL YEAR END 7-18 MONTHS OF FISCAL YEAR END CCPC ONLY CCPC ONLY NON-CCPC 4 MONTHS 8 MONTHS 12 MONTHS (120 days) (240 days) (365 days) The CRA only took DID YOU KNOW 68 DAYS 96% CRA's success at meeting these turnaround times on average, to process current claims in 2013! WHAT SHOULD YOU DOCUMENT? SR & ED CLAIM DOCUMENTATION SHOULD BE </> M Contemporaneous M Highlight technological ENGINEERING BOOKS obstacles /challenges M Dated WHAT'S A CRA REVIEW? THE CRA ONLY REVIEWS YOUR SR&ED EXPENDITURES AND TECHNICAL WORK. IT'S NOT A TAX AUDIT. CRA REVIEW TRIGGERS Significant increase in ITC's claimed year over year High expenditures for Date of last review subcontractors and/or (Reviews are likely to occur materials every 4/5 yrs) KEEP IN MIND Just because you are at a Just because your claim has been approved, doesn't mean it's been fully reviewed. high risk for a CRA Review, APPROVED doesn't mean you shouldn't submit a claim. RECOVER YOUR R&D COSTS CONTACT US FOR A FREE SR&ED ASSESSMENT: [email protected] BOAST |CAPITAL Boast Capital is a team of engineers and finance professionals with over 20 years experience helping companies in Canada and the U.S successfully claim and maximize R&D tax credits. | 1-800-290-5672 | @BoostCapital RESOURCES: CRA SR&ED Program: CRA SR&ED Service Standards: CRA Provincial & Territory R&D Tax Credit Breakdown:

Everything You Need to Know About SR&ED Tax Credits

shared by Boastcapital on May 29
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The Scientific Research & Experimental Development (SR&ED) tax credit is Canada’s most popular R&D funding program. In 2012, this program provided over $3.6B to over 23,000 companies. If your fiscal...


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