maximizing sr&ed tax credits for tech companies - r&d partners
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Maximizing Government R&D funding
for tech companies
Debbie Frail, P.Eng., [email protected]
© R&D PARTNERS 2015
Can SR&ED help your company?
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• Does your team include creative technical people developing new products / processes?
• Do you test ideas by building prototypes?
• Are you overcoming technical challenges to create new or improved technology?
If you answered “yes” to any of these questions, then the SR&ED program could help fund your project!
SR&ED Program
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SR&ED Program • Encourages innovation and leadership• Subsidizes eligible R&D expenditures• Managed independently within CRA
Best R&D Tax Incentive Program in the World • Canada ranked among the best worldwide
Very Accessible Program for All Companies• Over $3.5 billion Federal funding annually • Over 20,000 businesses each year
SR&ED Project Criteria
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Eligible SR&ED Activities
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Eligible Activities
Core R&D• Design• Engineering• Research
Supporting R&D• Identification, objective setting• Data collecting• Testing
Non-Eligible Activities
Routine Technical Activities• Routine testing • Addition of product features• Quality control
Commercial Activities• Business planning• Market studies• Commercialization
SR&ED Project Timeline
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Tech
nolo
gica
l Unc
erta
intie
s
Time
Product Specifications
Preliminary Studies
Market Validation
Routine Development
Technological Iterations
Aesthetic Modifications
Market Implementation
SR&ED Project
ExperimentalDevelopment
ExperimentalTesting
SR&ED Eligible Expenses
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Admissible SR&ED Project Expenses• R&D employee salaries• Subcontracted R&D (80%)• Materials consumed or transformed • Related overhead (proxy vs. traditional)
Non-Eligible Expenses• Employee remuneration other than salary• Capital expenses• Leasing expenses
Example (small business)
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Eligible SR&ED Expenses:Salaries 100 000 $Sub-contractor fees 20 000 $Materials consumed (testing) 10 000 $Materials transformed (prototype) 20 000 $Total expenses 150 000 $
SR&ED Tax Credit:Provincial Tax Credits 21 000 $Federal Tax Credit 80 500 $Total Tax Credit (67%) 101 500 $
SR&ED Filing Timeline
Income Tax Submission
Fiscal YearEnd
CRA Response
0 to 18 months Up to 4 months
SR&ED Refund
1-4 months
Income Tax Submission
Fiscal YearEnd
CRA Response
0 to 18 months Up to 4 months
SR&ED Refund
1-4 months
Note: Assuming a CCPC and filed with original tax filing, provincial credit to follow (varies by province)
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Application Requirements
• Technical: Brief report per project demonstrating concurrence with SR&ED requirements
• Financial: Cost summary per project
• Tax forms: Professionally prepared and filed within deadlines
• Documentation: List available substantiating documents
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SR&ED Project Evaluation (CRA)
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1.Technological uncertainty that could not be removed by standard practice?
2.Hypothesis developed to attempt to remove uncertainty?
3.Scientific method followed?
4.Technological advancement achieved?
5.Records of hypothesis tested and results kept?
Document, Document, Document:• Project outline: measurable objectives / challenges• Timesheets• Project Logbooks• Monthly reports • Test reports, analysis, conclusions• Contracts with all sub-contracted research
organizations• Invoices with proof of payment• Payroll records and T-4 summaries
SR&ED Best Practices
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R&D Partners
Mission: R&D Partners is committed to providing the highest level of service to meet client needs.
Team: Partners with over 25 years experience, professional engineers and finance/tax experts.
Commitment: We strive to leverage our knowledge base, and work hard to be an efficient and effective member of our client’s team.
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Services
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R&D Partners
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Maximize your government R&D funding, simplify your
life
Contact Us
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Tel. : 800-500-7733Email: [email protected]
www.rdpartners.com
Debbie Frail, P.Eng., MBA [email protected]