Presentation to RBC v3

8/8/2019 Presentation to RBC v3

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The Scientific Research & ExperimentalDevelopment (SR&ED) Program

A Brief Introduction

October 2010


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What is SR&ED?What is SR&ED?What is SR&ED?What is SR&ED?

The Scientific Research & Experimental Development (SR&ED)

tax incentive program

money from the government to encourage businesses, fromsmall to lar e to ursue advancements in their own technical

capabilities, regardless of the industry.

Administered by the Canada Revenue Agency (CRA)

Provides over $4 billion annually in investment tax credits(ITCs) to more than 18,000 claimants

Approx 75% of claimants are small to medium businesses

(SMB)

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You dont have to be a research lab to claim SR&ED.

Heres a few examples of industries that have successfully claimed:

Software

Telecommunications

Electrical and electronics

Printing and image processing

Energy and environment (cleantech)

Cosmetics Food industry (catering, bakeries, food plants, etcetera)

Manufacturing and metalworking

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Robotics and manufacturing systems

Tools and dies

Dental labs

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What can SR&ED Do For You?What can SR&ED Do For You?What can SR&ED Do For You?What can SR&ED Do For You?

You may receive:

A refundable investment tax credit

A reduction in taxes payable

Both of the above


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Who Can Claim?Who Can Claim?Who Can Claim?Who Can Claim?

Canadian Controlled Private Corporations (CCPCs)

Receive a refundable ITC applied first to taxes payable, refund on

the balance

Different types of claimed SRED expenditures receive a differing

rat o o re un :

Payroll 67%

Contractor payments 40%

Materials 40%

Proprietorships, Partnerships, Trusts

Receive 50% of the refund enjoyed, on the same expenditures,

compared to CCPCs


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Who Can Claim?Who Can Claim?Who Can Claim?Who Can Claim?

SR&ED work claimed must be related to your business

fundamental requirement


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Definition of SR&EDDefinition of SR&EDDefinition of SR&EDDefinition of SR&ED

SR&ED is

systematic investigation or search

carried out in a field of science or technology

by means of experiment or analysis to advance scientific knowled e or to achieve technolo ical

advancement


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Categories for SR&ED workCategories for SR&ED workCategories for SR&ED workCategories for SR&ED work

3 Categories for SR&ED work:

1. Experimental Development (most common): work done to

achieve technological advancement for the purpose of creating

new, or improving existing, materials, devices, products or

2. Applied Research: work done to advance scientific knowledge

with a practical application in view

3. Basic Research: work done to advance scientific knowledge

without a practical application in view


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To QualifyTo QualifyTo QualifyTo Qualify:

Work must be a systematic investigation carried out by means of

experiment or analysis, and carried out in a field of science or

technology (that is not excluded under the legislation), in pursuit of

advancement or scientific knowledge.

1. Identifying the obstacle

2. Formulating an objective

3. Developing a plan of action, including method of

experimentation

4. Testing the hypothesis


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To QualifyTo QualifyTo QualifyTo Qualify three criteriathree criteriathree criteriathree criteria

Technological Uncertainty

When trained, experienced professional staff dont know how

best to proceed

The pursuit of Technological Advancement

Seeking not necessarily finding success is not a qualifying

criteria

An incremental improvement to the performance of the

underlying technologies in your project, or your know-how about

them

Scientific or Experimental Approach

Systematic, and experimental


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Work Directly in SupportWork Directly in SupportWork Directly in SupportWork Directly in Support

The law specifies 8 types of supporting work only, which must also be

corresponding to the needs of the core research:

1. Engineering

2. Design

3. Operations Research

4. Mathematical Analysis

5. Computer Programming

6. Data Collection

7. Testing

8. Psychological Research


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Not SR&ED, Not EverNot SR&ED, Not EverNot SR&ED, Not EverNot SR&ED, Not Ever

The law excludes the following from being claimed:

1. Market research or sales promotion

2. Quality control or routine testing of materials, devices, products or

processes

3. Research in social sciences or humanities

4. Prospecting, exploring or drilling for, or producing minerals,

petroleum or natural gas

5. Commercial production of a new or improved material, device or

product, or the commercial use of a new or improved process

6. Style changes

7. Routine data collection


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ExpendituresExpendituresExpendituresExpenditures

SR&ED is ultimately about linking a body of qualifying technical work

with the costs of doing that SR&ED work, together with work that is

directly in support

You can claim:

Salaries and wages

Materials

SR&ED Contracts

Equipment lease costs

3rd-party payments

Capital expenditures


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SR&ED Critical ConceptSR&ED Critical ConceptSR&ED Critical ConceptSR&ED Critical Concept

A CRA science reviewer:

the issue is not what you do with the technology, but what you do to

the technology


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Frequently Asked Questions (FAQs)Frequently Asked Questions (FAQs)Frequently Asked Questions (FAQs)Frequently Asked Questions (FAQs)

Of course, were talking about this program at the very highest

level, so there are bound to be questions.

Here are some frequently asked questions that well discuss

quickly: : at a out ot ertax cre t or ncent ve programs c a m

SR&ED, can I claim anything else?

A: Claiming SR&ED does not exclude you from claiming

incentives under any other program, whether Federal or

Provincial.


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Frequently Asked Questions (FAQs)Frequently Asked Questions (FAQs)Frequently Asked Questions (FAQs)Frequently Asked Questions (FAQs)

Q: Is there a time limit for submitting SR&ED claims?

A: SR&ED claims must be submitted within 18 months of the

fiscal year-end.

A: No.

Q: Does my filing for SR&ED have any input on how CRA treats

my corporate return?A: No impact at all.


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Other Questions ?Other Questions ?Other Questions ?Other Questions ?

Questions ?

Nadya Geddes

416-800-0914.

Dmitry Brusilovsky

647-588-7777

[email protected]


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Thank youThank youThank youThank you

www.sredunlimited.com

647-588-7777

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Presentation to RBC v3