Tag Archives: maximizing SR&ED

How to Get the Most Out of Your SR&ED Claim

Businesses in Canada have long been taking advantage of the benefits of the Scientific Research and Experimental Development (SR&ED) program. With up to 60% of funding provided for innovative research and development in commercial applications, SR&ED claims have assisted many Canadian companies in funding their R&D projects and remaining competitive in the global market.

While the SR&ED program is extremely beneficial, if not done properly, it could lead to review and rejection by the Canadian Revenue Agency (CRA). In fact, SR&ED claims require in-depth knowledge of current incentives and a familiarity of how to best prepare your claim for maximized funding.

SR&ED claims require specialized knowledge

In order to first maximize your funding, the person preparing the claim must understand the intricacies of SR&ED and other R&D incentive programs. Understanding which incentives the business qualifies for requires both time commitment and knowledge of the Canadian Revenue Agency’s criteria.

For organizations with a small, specialized staff, the majority of their energy is directed towards working on their projects. In these circumstances, it makes sense to consider hiring an expert SR&ED consultant to manage the claim. SR&ED consultants, like Enhanced Capital Recovery, can manage the claim end-to-end and in most cases greatly improve the amount of your claim.

The SR&ED program is changing rapidly

SR&ED program policy is rapidly evolving due to the goals of the program and politics. Keeping informed of policy changes is essential to maximizing your claim and reducing the risk of claim rejection.

However, this can be a challenge for a busy organization that does not have a specific individual to handle SR&ED claims. CRA policy changes can be complex and require interpretation to understand fully.

SR&ED is a technical matter as much as it is an accounting exercise

An important step towards securing a SR&ED tax credit is to understand that the program is not a simple accounting exercise. SR&ED is based on technical merit and therefore requires proper technical documentation, in addition to financial documentation. Successfully achieving SR&ED funding goes well beyond the first step of discovering your company’s eligibility of the program.

Essentially, to qualify for an incentive, your business must demonstrate that it contributed to advancing an industry technology. This involves a scientifically documented process of overcoming technical uncertainty and contributing to the advancement of a new industry technology.

This could be making changes to a process to improve productivity or reacting to an unexpected obstacle with innovative expertise. Regardless of the experiment’s success, these attempts and processes need to be demonstrated in order to qualify for funding.

Proper documentation of SR&ED projects is critical

Satisfying SR&ED criteria is your company’s first requirement in applying for an incentive, but the ability to prove your contributions in the industry are equally as important. The CRA will likely consult with industry experts when reviewing your claim, making demonstration of your technological advancements and gained knowledge vital.

Keep track of any product trials and experiments to remedy unanticipated results, and documents explaining industry research, as these may be required when submitting your claim.

Meeting with key employees often to capture these improvements is a good idea, and making a routine of discussing and documenting your expanding industry knowledge will ease the application process.

Contact Enhanced Capital Recovery for a free consultation to find out how we can help you get the most out of your SR&ED claim.

R&D Funding for the Oil and Gas Industry

Canada’s oil and gas industry is a backbone of the country’s economy and the federal government is rewarding these companies with R&D tax incentive, such as SR&ED tax credits. However, businesses often shy away from applying due to misconceptions about the program.

The Canada Revenue Agency (CRA) excludes any oil and gas prospecting, exploring, drilling, and production operations from funding—but there are plenty of other related activities that could allow your business to recover up to 65% of eligible expenses.

To qualify, your company needs to have surmounted a technical uncertainty using scientific research or experimental development. Here are examples of what activities can and cannot qualify for funding and what you can do to capitalize on SR&ED tax credits.

What types of work are eligible?

While direct oil and gas operations are excluded from the SR&ED program, there are many opportunities to apply for funding. Creating or improving technology to advance a process, such as new software for more efficient automated engineering, is a common project in the industry.

The manufacturing sector also offers opportunities. Experimenting to improve hydraulic systems, A-frames, rubber components, or equipment that reduces environmental harm may be accepted.

Keep in mind other areas that are not directly related to the oil and gas industry, but could be an eligible everyday activity. For example, perhaps you improved your transportation or storage equipment to overcome a technical setback.

What projects do not qualify?

As mentioned, the CRA states that “prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas” do not qualify for SR&ED funding. Other activities like routine testing or data collection, market research, or advertising are also excluded.

How should I prepare for a claim?

Before beginning any projects that may qualify for SR&ED funding, it is important to document the entire process. The CRA will request all details about the research or development your company conducted, whether the projects were deemed successful or not.

The review team will also require information about which employees worked on the project, what tasks they performed, and what amount of their time spent working was allotted to the project.

How can Enhanced Capital Recovery help?

Hiring a professional SR&ED consulting firm like Enhanced Capital Recovery is especially worthwhile for oil and gas claims. These businesses often partner with outside companies and foreign joint ventures, making the SR&ED application a complicated process.

We are not only specialized in SR&ED procedures, but we are oil and gas experts as well. You will work with a highly skilled consultant who is familiar with the industry language the CRA expects.

To schedule a no-obligation discovery assessment, contact Enhanced Capital Recovery today and learn how much of your expenses could be recovered through the SR&ED program.

What Your Accountant Doesn’t Know About SR&ED

If your accountant is handling your SR&ED claim, you may be leaving opportunities on the table to significantly improve your claim. The fact is, filing an SR&ED claim is more of a technical exercise than an accounting exercise. In-house accountants may be qualified to handle the accounting aspects of the claim, but the key to maximizing your claim and having it approved, lies in proper tracking and definition of projects, a thorough understanding of what qualifies for SR&ED and technical documentation.

Accountants are simply not Engineers and may have little understanding of the technical aspect of SR&ED. In short, accountants lack the required scientific and industry-specific knowledge to identify and document a SR&ED claim. Specialized consultants like Enhanced Capital Recovery are both Engineers and Finance professionals, trained specifically to handle SR&ED claims. Here is how professional SR&ED consultants can take your SR&ED claim to the next level.

Maximizing your claim

Through the SR&ED program, Canadian businesses can recover up to 65% of eligible expenses with various tax incentives—SR&ED consultants understand how all of the applicable tax incentives work and can make sure they are applied. Whether you own a dairy farm in rural Alberta or software development company in Montreal, your Enhanced Capital Recovery SR&ED consultant will have industry specific technical expertise to help maximize your claim.

The SR&ED landscape is constantly shifting with new rules and new opportunities being introduced to enhance your claim. By staying up to date with SR&ED trends and news, SR&ED consultants are able to capitalize on these new opportunities.

SR&ED Consultants are industry experts

When you work with a SR&ED consultant, you are not only working with tax incentive consultants. SR&ED consultants have Engineering and Business backgrounds with matching expertise in everything from pharmaceuticals and chemicals to manufacturing and information technology.

Documentation is necessary when submitting a claim and the CRA expects industry-specific terminology and knowledge during the process. SR&ED consultants are able to document your claim to meet the CRA’s strict guidelines and standards.

Valuable industry partners

Experienced SR&ED consulting firms have developed networks and partnerships in industry. For example, ECR has become one of Canada’s most trusted SR&ED consulting firms by forming valuable partnerships in industry. SR&ED consultants also stay on top of news and policy changes, allowing for up-to-date information and a smoother, quicker claims process.

If your claim was previously rejected, a SR&ED consulting professional will help you determine the reasons it failed. Enhanced Capital Recovery has worked with several clients in this situation and were able to adjust their claim and get it approved.

Post-claim support

SR&ED consultants provide ongoing support. At Enhanced Capital Recovery, our client relationship doesn’t end when your tax credit is granted. Should the CRA review your claim, we will continue to support you through the entire process. We are also happy to work with you on future projects to determine SR&ED eligibility.

Risk-free consultations

Hiring a SR&ED consultant should not be a risk for your company. In fact an SR&ED consultant can take the risk of loss of time and loss of resources out of your SR&ED claim process. Working with ECR is risk-free—we don’t get paid until you receive a tax credit from your successful claim. There are no upfront or hidden fees and our services are based on a percentage of your credit.

Getting started with the right SR&ED consultants

All consultants at ECR are trained in SR&ED procedures and are skilled industry experts, but beware of other firms that contract work to technical writers or that may assign your claim to a junior consultant. We value all of our clients equally, no matter the services you require or the size of your business.

Please contact us about how ECR can assist your business today—let our SR&ED consulting professionals help you maximize your SR&ED claim while your accountant does the job that they do best.

Do you have a SR&ED Claim? SR&ED Consultants Answer

Companies often misunderstand the research and development criteria necessary to qualify for SR&ED funding—their experiments failed, the technology advancements were minimal, their research has been conducted elsewhere, are common misconceptions.

While the Canadian Revenue Agency (CRA) does require certain criteria for funding, your company may have already fulfilled the research and development aspects. Here are four common reasons why companies decide not to pursue a SR&ED claim.

“Our work doesn’t qualify for SR&ED funding”

The CRA gives funding to companies from a wide range of industries. This may include:

Agriculture
Manufacturing
Food & Beverage
Engineering and Information Technology
Oil & Gas, Chemicals, and Green Energy
Medicine and Biotechnology

Funding is also available to companies who may not focus on these areas, but carry out day-to-day projects that qualify. For example, a barber shop that developed new computer software for scheduling appointments may qualify under information technology.

The CRA accepts claims from companies of all sizes, and small businesses conducting everyday experimental developments actually form a large portion of the claims.

“We did not meet our experiment’s goals”

SR&ED funding is awarded on the attempt of your project, not success. Three criteria are necessary to qualify: you must identify a technological problem, attempt to fix the problem with research and experimentation, and be able to demonstrate you did so in a systematic—not random—approach.

As long as your company attempted to overcome a technological setback using technology, there is a good chance it can qualify. Several expenses for the development may be claimed, including employee salaries and material costs

“Our research and experiments weren’t ‘groundbreaking’”

The scientific research necessary for funding is not required to take place in a laboratory or be related to medicine, biology, or other sciences. A baker experimenting with new ingredients to extend a product’s shelf life or a fish processing plant researching new canning methods could also qualify.

The research doesn’t need to be innovative to qualify, either. Your business can use existing information and resources in finding a solution, so long as the research gathered is innovative to the company.

“Our technological advancements were too minimal”

Another common misconception surrounding SR&ED is that significant technological advancements are required to receive funding. Your development doesn’t need to benefit the entire industry, as long as it solves your company’s technology problem.

Your business can also improve upon an existing technology to qualify, such as adapting a green energy solution for increased efficiency. Small advancements taking place over an extended period of time may also be accepted, especially if the time is used to gauge your project’s development.

If you are unsure of whether your business qualifies for SR&ED funding, contact Enhanced Capital Recovery today for a free consultation.

SR&ED Claims 101 for the Food Manufacturing Industry

Many food manufacturing and processing companies across Canada are fulfilling the criteria for Scientific Research and Experimental Development (SR&ED) tax incentives, yet few claim the available funding. How can this be the case?

In large part it’s due to a variety of misconceptions clouding the SR&ED application process. The main misconceptions are about the size a business needs to be and the type of R&D that’s acceptable. The fact is, businesses are not required to conduct laboratory research, or be a large-scale company.

So long as your business demonstrates a technological advancement or having solved a technical uncertainty, it could qualify—and those advancements don’t need to be as exceptional as you might imagine.

Who can benefit?

A wide range of food and beverage manufacturers may qualify for SR&ED tax credits. These can include:

Confectionary, dairy, starch and oil manufacturers
Seafood, poultry, egg, produce and fruit producers
Meat processing and slaughtering operations
Wineries, and beverage, tobacco, and specialty food companies
Pet and animal food manufacturers

Canada is home to thousands of food processing companies, in these categories and others. The best way to find out if your business qualifies is to arrange a no-obligation consultation with an SR&ED specialist.

What is technical uncertainty?

Establishing your company’s ability to overcome technical uncertainty goes a long way in applying for SR&ED funding—but what is it, exactly? It means that your business encountered an obstacle during a manufacturing or production process, and made steps towards solving it through your own investigation and without knowledge existing in the industry.

Examples could be a product confronted with challenges to its shelf life solved without using industry-established chemicals, or introducing a quicker process for enriching baked goods with vitamins and minerals to meet your distribution needs.

Technical uncertainty can be derived from something as basic as a new recipe resulting in unanticipated effects that your staff resolved using their own knowledge.

How might I have advanced technology?

Much like technical uncertainty, your company’s technological advancements in the industry don’t require laboratory examinations. Perhaps you increased your product’s flavour and texture using natural ingredients, or developed machinery for increased packaging efficiency.

The Canadian Revenue Agency awards merit of technological advancement based on attempt, not success. If your business encountered technical uncertainty, but failed to solve the problem, the research still helps the industry gain knowledge of the issue. The only requirement is that the effort was based on a systematic investigation—not random attempts.

Why is it important to track this information?

There is a good chance your food manufacturing business has made technological advancements, congratulations! But demonstrating these industry contributions is just as essential in applying for a tax incentive.

The criteria can be proved though conducting product trials and documenting the results, or indicating how the knowledge you gained will be applied to future development. It is important to record each development and research process fully in order to best qualify for funding.

ECR works with companies of any size, and many companies eligible for SR&ED are small businesses. With SR&ED consulting offices in Vancouver, Edmonton and Toronto, our team has brought success to many companies, including those whose claims were initially rejected by the Canadian Revenue Agency. Your company will work with a consultant knowledgeable in the industry to recover the most funding, with the least amount of risk possible.

For a no-obligation consultation, submit a contact form and our team will arrange a free assessment of your SR&ED case.

How to Maximize Your SR&ED Claims

Canada’s Scientific Research and Experimental Development (SR&ED) program provides over $4 billion in tax credits to thousands of companies each year. Small businesses reap the benefits most with over 75% of funding going their way, and the program is constantly making Canadian companies competitive on the global market.

While the SR&ED program is extremely beneficial, it requires in-depth knowledge of current incentives and a familiarity of how to best prepare your claim for maximized funding.

Become an expert in SR&ED—or acquire external assistance

In order to first maximize your funding, someone in your company must be knowledgeable of the SR&ED program. Understanding which incentives the business qualifies for requires both time commitment and knowledge of the Canadian Revenue Agency’s (CRA) criteria.

If you company possess a small staff, or you want employees’ energy directed towards their projects, consider allowing an expert SR&ED consultant to manage your claim. SR&ED experts, like Enhanced Captial Recovery, can not only help you make a claim, but in most cases significantly improve the amount of your claim. View our Youtube Channel for more information on how SR&ED works.

Keep up-to-date with Program changes

The SR&ED incentive criteria are constantly changing as new policies and requirements are introduced. Keeping informed with these changes is essential to maximizing your claim, and can best be followed by regular review of the CRA’s information bulletin.

However, the key points of these changes are often amidst extensive documents and are not simple to uncover. For example, a federal government budget report last October revealed changes to which expenditures are covered under the program.

Be aware of necessity to satisfy “technical merit”

An important step towards securing a tax credit is to understand that the program delivers incentives based on “technical merit”—gaining SR&ED funding is not a simple accounting exercise, and the process goes beyond discovering your initial eligibility of the program.

To qualify for an incentive, your business must demonstrate an occasion where it overcame technical uncertainty, or contributed to advancing an industry technology.

Document all research and development ventures

Keep track of any product trials, experiments to remedy unanticipated results, and documents explaining industry research, as these will be required when submitting your claim. Make sure to file all paperwork demonstrating company growth and job creation, as well.

Meeting with key employees often to capture these improvements is a good idea, and making a routine of discussing and documenting your expanding industry knowledge will ease the application process.

For a no-obligation consultation, submit a contact form and our team will arrange a free assessment of your SR&ED case.