If the SR&ED schedules and forms are incorrectly completed, the CRA may deny your claim.
This error is one of the leading reasons SR&ED claims are denied; therefore, it is important you work with an accounting firm that is well-versed in this area. Our team at SRJCA brings proven, successful experience in putting together SR&ED claims that recover most of your R&D costs.
If you answer “yes” to any of the following, you could be eligible for SR&ED credits:
- Does your project have technological uncertainties?
- Does your project offer technological advancements?
- Does your research result in scientific or technical content?
There are a number of other factors that go into calculating your SR&ED tax credit, including the type of expenses incurred and amount of time spent on the project.
You have two calculation methods are your disposal:
The traditional method will require you to itemize your overhead and related expenditures.
This is a simplified method that allows you to claim 55% of salaries and wages for employees who are directly involved in your SR&ED-qualified work.
Overall, your return forms must satisfy the following criteria:
- Technological Uncertainties
- Technological Advancements
- Scientific or Technical Content
- Gather Proof of Documentation Supporting Your SR&ED Claim Activities
Deadlines vary. For corporations, it is 18 months, and for individuals, it is 17-and-a-half months.
- Natural and formal sciences, including physics and chemical studies
- Engineering and technology development, including civil and mechanical engineering
- Medical and health sciences, including basic medicine and clinical medicine
- Agricultural sciences, including animal science, dairy science, and biotechnology
- Software development, including software startups.
- Salary or wages
- Contractor costs
- Materials consumed or transformed
Examples of ineligible expenditures can include marketing, administration, and sales expenses related to the project because they are not related to the development of the project itself.
If your corporation is a Canadian-Controlled-Private-Corporation (CCPC), it is eligible for a refundable SR&ED tax credit. Other types of corporations can also earn a non-refundable tax credit, which can be applied to income taxes.
However, if you are not a CCPC, then you have a basic rate of 15% of SR&ED expenditures that qualify. This amount will be applied to taxes owing.
Our fees can range from 15% of the benefit received for large claims to 25% of the total benefit for smaller claims.
The fee includes translating your project’s technical details to a language the CRA understands, determining the amounts to claim, assisting with documentation, and coordinating with the CRA in case of a review.
The technology advisors will assess whether your project qualifies under the SR&ED and the financial reviewer will look to see if the costs you claimed for the work are allowable.
You may also get a visit by the CRA reviewers, who will then speak to your technical and financial staff and review your documentation and other supporting evidence.
There are several methods of US-based companies for applying for the SR&ED:
- Establishing a Canadian Subsidiary
- Establishing a CCPC
- Canadians Abroad
The amount that you can claim varies between each option, so the best starting point would be to speak to a specialist at SRJCA who has successfully filed each of these.
If your answer is “no”, then you may qualify.
If your answer is “yes”, then you are unlikely to qualify.
Individuals with a Business Tax Filing: you have 17.5 months from the calendar year-end. So based on December 31, 2018, you have until June 15, 2020.
Corporate Tax Filings: you have 18 months from when your year ends. For example, if your year ends on June 30, 2018, then you have until December 31, 2019 to file.
Trust Tax Filings: you have 15 months from where your year ends. If your year ends on June 30, 2018, you have until September 30, 2019.
If your deadline falls on a weekend or statutory holiday, it will be pushed to the following business day.