Get Approved For The SRED Tax Incentive Program

Finance your R&D efforts through the SRED tax credits – the largest federal program that supports R&D in Canada. Learn more about eligibility and what the program has to offer below.

What is the SR&ED Program?

When we hear R&D, we think of a science lab or white coat or NASA! Fortunately, the SR&ED program is applicable far beyond this imagination and in fact is a hidden source of financing for your company.

To encourage businesses to undertake Scientific Research and Experimental Development activities in Canada, the Federal Government provides one of the most generous R&D cash refund / tax incentive programs in the world.

The program is more technical than financial.

In combination with various provincial programs, companies may recover up to 68% of the qualified cost. And EVAMAX can help you to recover those costs.
This program also goes by various names such as SR&ED or SRED, R&D (Research & Development) Tax Credit, Research Tax Credit, R&D Credit, Research & Experimentation Tax Credit, Investment Tax Credit, R&D Funding.

What is the meaning of SRED, and why does it exist?    

The exact meaning of this program is Scientific Research and Experimental Development. It is put in place by the Canadian government to give back to the corporations that conduct research and development. Whether it is for their betterment, for the world, or the future. Acquiring new knowledge is by no means an easy task. Which is one of the main reasons this program exists. The importance of R&D Tax credits is perceivable through such points:    

  • The importance of innovation    
  • The priority of SRED    
  • Rewarded for advancements/working towards advancements    

The importance of innovation is highlighted not only by the government but also by organizations worldwide. Innovation is the path of our future, including our economic growth. The meaning that SRED holds is considerable compared to other tax credits and incentives, seeing that this program is Canada’s most valuable research and development credit. When considering the generosity of this credit, we can see that innovation is a high priority for the government. The reward of R&D Refunds speaks for itself, as close to $3 billion in credit goes out to over 20,000 businesses.

Contact EVAMAX today for any questions. 

SR&ED Overview

These tax incentives come in three forms: a reduction of taxes, an investment tax credit, or a cash refund. This program is the largest federal program that supports R&D in Canada. In fact, the program provides more than $3 billion in tax incentives to over 20,000 claimants each year.

The program provides tax incentives for three types of research:

Basic Research

Work done to advance scientific knowledge without any practical application in mind.

Applied Research

Work done to advance scientific knowledge specifically for a practical purpose.

Experimental Development

Work done to achieve a technological advancement to create new or improve existing products or processes.

The work must be done in Canada and can be done either by the company itself or on behalf of the company by another party such as a contractor or research institute.

An essential guide to SRED Canada Incentive Program   

Innovation is fundamental for growth. It is the reason that so many industries, from software and manufacturing to biotech and agriculture, have come so far as time has progressed. Recognizing the importance of innovation, the Canadian government implemented a tax credit program as early as 1944. However, it wasn’t always known as SRED Canada.    

Here are some SR&ED report examples on what qualifies under this Canada incentive program:    

  • Basic Research: this is the most straightforward form of research done to advance scientific knowledge   
  • Applied Research: is similar to basic research, but instead of advancing knowledge, it is advancing the application of knowledge    
  • Experimental Development: innovative advancements or creations of new processes    

There are common misconceptions about the SRED claims in Canada. The reason behind that is how widely renowned this tax refunds is. The most common misbelief is that you must be a technological or scientific company to access this incentive. Though the truth is if any attempts for technological advancements have happened at some point in time, this tax refund program could be something applicable to your corporation.  

Have further questions? Contact EVAMAX. 

How do SRED Tax Credits work in Canada?    

SRED is an incentive from the government claimed as investment tax credits on expenditures in the forms of cash refunds, deduction of taxes, or both (applied to taxes payable for particular tax years). ITCs can be used to reduce businesses’ taxes payable. The difference is when working with SR&ED, these ITCs can be carried on in Canada. It allows taxes payable to be carried for the upcoming three years or any prior 20 years. These credits end up calculated by looking at certain different factors, such as:
 
  • Looking at salaries of the people involved directly in the research and development of their innovative projects
  • Canadian Contract Expenditures for projects performed for the corporation
  • SRED overhead expenditures    
  • Third-party payments    

Tax credits can also differ depending on the type of corporation your company categorizes under and the amount of funding you can access. Taxable income is another way these tax credits are claimable. Filling out mandatory paperwork for each taxation year may be a complicated process for those that aren’t familiar with it. Having the correct information throughout the paperwork is imperative. The CRA can flag your claim, ending with further issues left to resolve. Getting a knowledgeable SR&ED consultants is the recommended process for companies applying for this tax credits without wanting a complicated process.    

Are you still confused about the process or have further questions about this tax credits? Contact EVAMAX today!

Common questions about SRED 

How long do SRED claims usually take?    

  • The Canada Revenue Agency (CRA) processes claims within 60 days. A refundable claim picked for further review and processing could take 180 days. They also aim to follow its set targets 90% of the time.    

Is there a way of knowing if my claim is eligible with the CRA?    

  • Projects can qualify as basic research, applied research, experimental development, and work undertaken on behalf of the corporation such as design, operations, engineering. Along with a why and how as to the reasoning behind the project.    

What is the success rate of SRED claims as to the CRA?    

  • Considering that the Canada Revenue Agency (CRA) receives up to 20,000 claims yearly, saying yes to each one is improbable. You can get a general evaluation from them or from consulting firms that offer the service to showcase whether your research and development work qualifies. Your success rate will then be dependent on your project.  

How do you make sure that your R&D claim is acceptable by the CRA?    

  • The best way of ensuring that your claim goes through is by getting SR&ED consultants or professionals that specialize in this tax refunds program.  

What is SRC’s meaning?

  • The SRC meaning is Semiconductor Research Corporation.It provides a collaboration space between tech companies, research facilities and government agencies.

Contact EVAMAX today for all your CRA and R&D Refunds questions.

Myths & Facts About SR&ED

MYTHS FACT ABOUT S&D PROGRAM
It is for high tech sector and for lab coat R&D only —so I can’t claim any benefit Any industry can get the benefit of the SR & ED program as long as there has been an attempt for a technological improvement/advancement. These benefits include not only the research cost but also wages, capital expenditures and overheads.
It has more incentives for small companies than larger corporations It has more incentives for small companies then larger corporation.
Our R&D work was not successful You can get a refund even if the experimentation failed.
I don’t pay taxes, how can I get a credit? You can get a refund even if you have not filed taxes or declared loss.
We spent a lot of money on experimental projects but didn’t make the sale. It is about expenditure…NOT sales.
I don’t have time for all the paperwork involved in claiming SRED benefits. My accountant never mentioned about it to me either. The program is more technical than financial... Specialists at EVAMAX can simplify the process by taking the paper chase off your shoulders.

What are the requirements to qualify for SRED claims?   

The outlines for SRED claims that qualify are on the Canada Revenue Agency website. The issue is that the wording they used could cause some confusion since it can be a little complicated. To put it simply, some things that qualify are:    

  • Basic research: research to acquire new knowledge    
  • Applied research: developing new products and processes   
  • Research and development: apply new knowledge to improve existing products and processes    
  • Work done regarding engineering, design, programming of all above processes    

The work done for the research and development cannot include things such as market research, sales, prospecting, and anything not related to the research or development of the product, as that does not qualify for a claim.     

Other requirements for your work to be eligible would have to be the “why” and “how” of the project. These two requirements are pretty self-explanatory. The “why” is the reason behind the development of research. The “how” explains the creation of the process or how the corporation conducted the research.   

Who qualifies is where more confusion may generate. Still, any corporation that has faced technological challenges and has found a way to overcome those challenges will be eligible. Amount of SRED claims may vary per province as well, check our funding list by region (includes SR&ED Alberta, Ontario, etc.).

Have further questions about qualifications? Contact EVAMAX today.

What Qualifies for SR&ED?

If you are a Proprietorship, a Partnership, or a Corporation carrying on a business in Canada and conduct any of the following activities, it is likely that your company qualifies under the program:

Based on the type of entity, you may qualify for the following benefits:

Canadian-controlled private corporations (CCPC)

Private companies controlled by Canadian ownership can earn a refundable tax credit up to 68% on qualified costs.

Other Corporations

Public companies or Private companies not controlled by Canadian ownership can earn a tax credit up to 30% qualified costs that can be applied to reduce taxes payable.

Individuals and trusts

Individuals (proprietorship) and trust can earn a refundable tax credit up to 30% on qualified costs.

Members of a partnership

Since a partnership is not a taxpayer, it cannot earn a tax credit itself on SR&ED. The members of the partnership, however, can claim tax credits. They do so by claiming SR&ED at the partnership level and then allocating the credit to the individual partners who can then claim it on their personal tax returns. 

What are eligible expenses that SR&ED Canada can cover?   

As SR&ED is not a grant but rather a tax incentive program (part of the Income Tax Act of Canada) provided by the Canadian government, distinct outlines are necessary. Regarding eligible expenses, finding covered costs may be tricky by just reading guidelines, aside from the straightforward descriptions of the different kinds of research that qualify for the SR&ED eligible expenses.    

Costs under eligible expenses must be directly related to the actual project. We can start by describing these terms:    

  • Direct: which is without intervening factors or intermediaries    
  • Related: associated with the specified item or process    

Now for qualifications of eligible expenses, these expenditures must be directly related to:    

  • The R&D work    
  • The R&D staff    
  • Machinery or equipment used by staff to perform the R&D work    

With all of these outlines set, it is easy to highlight expenses that would be eligible to be claimed for innovative projects. Such expenses are the salary or wages of the individuals directly involved in the research and development project, Canadian contract expenditures, and more (refer to SR&ED report examples you can find). These complications are one of the significant reasons that getting consultants that specialize in the program’s eligibility are recommended, as the world of R&D Tax Credit is a complicated but beneficial one for businesses to keep within their scope.   

Looking for specific information per region? Check out SR&ED Alberta, Ontario, etc. OR Contact EVAMAX today!

What SRED Costs Are Claimable?

What Does Not Qualify SRED?

What is the SR&ED expenditure limit, and how does it work?  

SR&ED expenditure limits change depending on multiple factors, such as corporations and sometimes even tax years. Still, changes to these expenditure limits are not frequent. As an investment tax credit (ITC) is the most common way of claiming this tax incentive program, the CRA provides a general expenditure limit:   

  • The base rate of 15% for claimants that are corporations, sole proprietorships, partners of a partnership, and beneficiaries of trusts  
  • Canadian-owned private corporations (CCPC) can get up to an enhanced rate of 35%, at a maximum of $3M.  

Some other factors that control the SR&ED expenditure limit, usually reductions, are taxable incomes and capital, such as:   

  • If the taxable income of an associated corporation exceeds $500k, it reduces the maximum expenditure of $3M provided reduces  
  • If the taxable income of the associated corporation exceeds $800k, it starts to become ineligible.  
  • If taxable capital employed in Canada for the previous taxation year reaches $10M, it reduces the maximum. It starts becoming ineligible as it progresses up to 50 Million.  

The SR&ED expenditure limit is always listed out and updated by the Canadian Revenue Agency. However, the actual amount available for your corporation will be dependent on calculations based on the amount of work that qualifies for your personalized claim.  

Have Further questions or in need of SR&ED guide? Contact EVAMAX here. 

Does my project qualify for the SR&ED program?   

The R&D refunds program in Canada may have some complicated to understand outlines. Still, at its base, a project qualifiable for the scientific research and experimental development program will be dependent on a couple of factors:    

  • Was there a scientific or technological uncertainty?     
  • Was scientific or technological knowledge gained?     
  • Was your objective achieved, or were any additional attempts abandoned?     

If these statements are answerable, your project will be eligible for the SRED credits program. The next step would be considering how these project affects your day-to-day business. If you prepare for your project in advance, it would be easier to track what is eligible for the Scientific Research and Experimental Development program and what is not. If your work was not planned and has occurred because of technological or scientific uncertainty, it will still be eligible.     

To continue further, grouping your eligible work would be the next step. Some points to understand when considering your project for this refund program would be:    

  • Qualifiable R&D work can occur during your everyday business projects    
  • SR&ED and non-SR&ED work can both happen at the same time    
  • Identifying your eligible SRED credits work from earlier on in a project and keeping track of it is beneficial    

With all these points clarified, your project can be within the scope of the R&D refunds program.     

Do you want to know if your project can be considered eligible by CRA standards? Contact EVAMAX today. 

Why hiring an SRED consultant is beneficial.  

The claim process can be lengthy and complicated, especially for those that may have never worked on one before. Some of these complications can be identifying your projects and activities, finding out whether they qualify, filling out the different forms, and more. Which is the reason that consulting firms exist. Getting an SRED consultant makes the whole application process a lot simpler. Especially for firms that may not work with the CRA or do not want to deal with the hassle of filling out pages of legal work. Some benefits to getting a consultant:    

  • Higher success rates    
  • Close to no time spent on the actual claim    
  • Maximize benefits and funding available     
  • Further help in case of audits or objections    
  • Ease of access for future claims & additional help    

SRED consultants are convenient for those considering claiming under the program. These professionals can write and fill out necessary documents as per Canadian Revenue Agency’s expectations. Firms that have been doing SRED consulting for a long time and have found significant success are the best place to go. Not only do they make your life easier, but they end up providing you with more funding than you may have initially anticipated.    

Need SR&ED guide ? Contact EVAMAX today!

Why Talk to Us?

Have faced challenges with SR&ED Audits or Objections?

You’ve been successfully claiming SR&ED incentives but want to get a Second Opinion?

Not sure if you are Maximizing your Benefits? Never heard of SR&ED tax incentive program?

Think it’s too much paperwork for you to Fund your Innovation? Think again.

How much cash are you leaving on the table?

How EVAMAX Maximizes your SR&ED benefits?

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Why Choose EVAMAX?

We proudly claim to have a success rate of more than 96% in the last 18 years.

Our people, processes & practices are specific to our client’s industry.

Our committed, resourceful, and expert team of engineers have a combined experience of 82 years working on the SR&ED Program which helps expedite the refund process.

Our diverse industry experience helps us identify why & what others are successfully claiming and you are not. We can repeat the success with you.

Quick turnaround time and keep time commitments.

We represent & prepare you for Revenue Canada’s technical & financial audits.
We ensure the time spent on the claim process by the client is at minimum, so they can focus on what they do best, while the EVAMAX team does what we are best at: Maximizing R&D refunds for you.
We are always on top of the latest changes in legislation that affect your industry, which is key to maximizing the claim. What could not have been claimed previously could be claimed now.

With our size and infrastructure, we cater to clients located anywhere in Canada.

We not only do SRED but also other grants (including Innovation, Commercialize Innovation, Hiring & Training, Business Expansion).

EVAMAX Service Standards

Confidentiality

EVAMAX ensures the confidentiality of your trade secrets and intellectual property. The Federal Government also ensures the confidentiality of reports & returns submitted to them.

Our Fee

We work on a flexible fee structure on a case-by-case basis. We undertake assignments on contingency fee, hourly or fix price.

To get started on your SR&ED claim