The Scientific Research & Experimental Development (“SR&ED”, “SRED”,or “shred”) program is Canada’s largest R&D Tax Credits program. It is designed to encourage businesses to carry out their research and/or development (R&D) in Canada. Over $3.6 billion in form of cash or tax refund is filed and paid to over 22,000 small to large businesses each year as long as the eligible work has been performed in Canada.
The program has two separate components: the Scientific Research component and the Experimental Development component. Each has different eligibility and claiming criteria. Approximately 75% of claimants are small businesses. Approximately 90% of the money distributed through R&D Tax Credits for development projects and 10% for Scientific Research. It is highly important to determine eligible projects as it is usually much more broad than what most typically think of as R&D. This incentive program has very specific eligibility criteria, but these criteria apply quite broadly to the shop-floor work performed by most small businesses or manufacturers. The most common mistake made when filing for R&D Tax Credits is underestimating eligibility. Failures are typically an important sign for eligibility of a project. It is common for a business to underestimate their eligibility by lack of knowledge in identifying eligible projects or qualified expenditures.
The top most manufacturing sectors that qualify for the SR&ED tax credits are:
- Food and beverage manufacture
- Tool and die
- Pulp and paper
- Oil and Gas Industries
- Green Technologies
- Clean Technologies and Renewable Energies
- Life Science and Biotechnology
- Agriculture and Farming
- Printing and Packaging
- Plastics, Polymers and Resins
- Construction and Real-Estate
- Multimedia
- Casting & moulding
- Software development and computer services
- Electrical & Electronics
- Manufacturing and Metal Fabrication
- Automotive
- Aerospace
- Communication/telecom equipment
- Robotics & Automation
- Medical devices & instrumentation
- Pharmaceuticals
- Chemical
- Cosmetics
- Furniture and Upholstery industries
- Textiles Industry
- Advanced Manufacturing and Assembly
- Medical and Clinical
- Welding and Spring Manufacturers
- Photonics
- Laser Marking, Engraving and Cutting
- 3D Printing and Scanning, Rapid Prototyping
- 3D Imaging,
- Advanced Materials
- CAD/CAM
- Castings
- Design Engineering
- Micro Machining and Tooling
- PLM/ERP Manufacturing Software
- Pneumatics & Hydraulics
- Testing & Instrumentation
Kelid™ assists you in all filing stages to increase the claim size by a factor of 5 or 10x through educating and training your personnel about the program and thorough investigations of resources allocated to the eligible projects. If you are successfully claiming and wish to continuously do this, it is advisable to assess your R&D Tax Credits with a trustworthy consultant if possible, a company that has knowledge about audit defence in addition to a record of successful claims. Moving on, advisors could possibly recommend time tracking systems that won’t use up excessively much of your time and effort which will help you stay on track for future claims. For further information on project eligibility check Kelid™’s Assessment Look Up and Claim Calculator.