The Scientific Research and Experimental Development (SR&ED) tax credit is a business assistance program administered by the federal and provincial governments to encourage and support organizations to undertake research and development (R&D) activities that they may not otherwise be willing to attempt.

Companies of any size that invest in research and development (R&D) in Canada can take advantage of the Scientific Research and Experimental Development (SR&ED) tax incentive program, Canada’s largest R&D program.

There are three types of SR&ED benefits -

1. Basic research

2. Applied research

3. Experimental development

These tax incentives come in two forms:

1. Income tax deduction

2. Investment tax credit

Investment Tax Credit may be applied against income taxes payable in the current year, in a prior year, or may carried forward to a future year.

In some cases, the credit may be refundable.

At the federal level, a 15% non-refundable tax credit on qualified expenditures is available.

Certain Canadian-controlled private corporations are eligible for a 35% refundable credit on the first $3 million of qualified expenditures, and provincial tax credits, which may also be refundable, are also available.

The provincial credits range from 4.5% to 30%.

Please note the numbers shared above are circumstantial & highly variable due to to external circumstances.

The process includes multiple steps and varies according to the industry. Ideally, the process takes over 3-6 months.

Sheldon Group team ensures your application has all of the required documents.

Our industry experts understand the complex processes, technology & intricacies of your business.

Some of the indicators of an eligible SR&ED project include:

● New application of existing technology

● Capital spends

● Budget overruns

● Developing or improving products and processes

● Technical issues

● Consulting studies

● Cost reduction strategies

● Environmental/regulatory compliance

● Integration of new technologies within old facilities

Our experience has helped us determine the following scientific criteria for SR&ED eligibility -

1.Advancement

• New knowledge gained from the development of new or improved products or processes

• Small, incremental knowledge gains or improvements are eligible

• Both successful and unsuccessful projects are eligible

2. Uncertainty

• Technological problems resolved, leading to technological advancement

• Can often look like routine work but it is the context that matters. SR&ED occurs when you are moving beyond your existing knowledge base.

3.Content

• The project must be executed via a systematic investigation vs. “trial and error”

• Work must be supported by some form of evidence and performed by qualified people