Scientific Research & Experimental Development program, or SR&ED (pronounced SHRED); Canadian tax credits
The Scientific Research & Experimental Development program, or SR&ED (pronounced SHRED) is a tax and cash credit program funded by the Canadian government for businesses that attempt to innovate. It is an almost $4 Billion dollar annual program designed to reward CCPC’s (Canadian Controlled Private Corporations) for the money that they invest through salaries to pay employees for the new and innovative work that they are doing.
Even if a new innovation is ultimately not successful, the time spent in the research and development may still qualify a company for a tax credit. Many companies do not apply for this credit either because they have not heard about it or they think it is meant for larger technology companies. This is not the case, a vast majority of these claims come from companies in Mining, Industrial, Food & Beverage and Life Sciences.
What determines SR&ED are 3 main criteria:
There must be some level of ‘Technological Uncertainty’ in the work being claimed. In essence there cannot already be a solution that exists for this uncertainty and you are trying to find a solution.
A ‘Systematic Investigation’ must be undertaken to try and resolve the Technological Uncertainties.
Some sort of ‘Technological Advancement’ must be achieved.
Mantralogix works with many such companies everyday helping them with their technological needs and requirements, so we are constantly exposed to new and innovative practices day in and day out.
If you have any inkling that you might qualify for this tax credit, I recommend that you review the CRA guidelines listed here or contact your Accountant for advice and to determine if you qualify.
Good luck and keep investing in innovation!