The Research & Development Tax credits in Canada and Ontario (R&D Tax Credits) are essential to the Software/IT companies, which constantly indulge in developing and improving existing technologies, geared towards innovation or perhaps maintaining a competitive edge. In order to consistently preside amid the efficiency and improvement zone, firms come across technical & technological barriers, which cannot be resolved through the routine SOPs. Such uncertainties require need be resonated by stepping beyond the standard practices: e.g. modifying the product design, revising the product architecture, improving performance metrics, reforming algorithms, debugging integration designs etc – whereas a major portion of expenditures incurred to systematically investigate the technological & technical obstacles qualify for recovery from CRA.
Typically the IT staff engaged in the activities includes the following activities:
- Digital Media & Content Delivery, Application Development & Integration, IT/Marketing Consulting, Enterprise Softwares
- Efforts to improve the reliability and security of existing products
- Migration/Implementation of data conversion
- UI Development/advancement
- Advancements/Improvements to client projects and custom projects
- Development iterations with respect to the overall product design, structure, algorithms
- Development of platform bugs and/or improving limitations of the existing infrastructure
- Development of internal support and quality assurance functionalities
At IT companies, innovation and improvement is so integral to sustenance that it may feel trivial to the developers engaged in the process. Therefore, it may appear as routine such as testing and experimentation tasks whereas they may be qualified for the R&D tax credits. Therefore, several companies may end up leaving hundreds of thousands of qualified expenditures unrecovered under the R&D Tax Credits and Refunds in Canada and Ontario. Several companies in our experience include:
- Software development
- Data transmission protocols
- Firmware development
- Computer networking
- Business intelligence
- Computer modeling & simulation
The Research & Development tax credit (R&D Tax Credit) is the single most generous tax incentive by the Canada Revenue Agency (CRA). IT Companies that benefit from the SR&ED tax credit program recover significant amount of qualified expenditures. Many companies may experience vagueness and difficulty understanding the CRA requirements and policies surrounding the R&D tax incentives. Therefore, it is quite common for companies to face challenges in identifying and claiming the appropriate activities/expenditures, leading to under claiming what they may be entitled to. AT SRJ Chartered Accountants, rest assured our clients are assigned consultants specialized and experienced in the field of operation on the client’s corresponding industry. Our consultants are skilled in identifying unclear, commonly missed, vague, and under claimed activities, which leads to recovering fair entitlement of R&D tax credits.
The Ontario R&D Tax credits are quite lucrative for IT firms, as they assist firms to recover up to 71% expenditures (payroll, capital, contract expenditures etc). The recovery through R&D Tax credits ranges from 20% – 80% of qualified expenditures, depending upon the province of residence and type of claimable expenditures.
At SRJ Chartered Accountants in Toronto and Mississauga, our objective is to identify all facets of qualified technical activities and corresponding expenditures, leading to a successful SR&ED Claim completion. Whether you are a start up corporation or experienced in filing SR&ED Claims, our experienced and professional consultants will minimize the disruption from your business operations. We have a proven history of delivering quality results using our approach and we have been able to establish a strong reputation with CRA.
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