Are your business’ expenditures eligible for SR&ED credits?
Do you invest time or means to innovate, improve knowledge, products or processes? Part of this investment could be refunded to you as SR & ED investment tax credits (ITC).
Eligibility for ITCs depends on the type of business, why and how SR & ED is conducted. Is eligible for ITCs any:
- Canadian-controlled private corporation CCPC (2) whose taxable income for the preceding taxation year does not exceed the qualifying income limit;
- CCPC that is associated with one or more other corporations and the total of taxable income including those of associated corporations in the preceding taxation year does not exceed the qualifying income limit.
Determining the eligibility of your expenses for RS & ED involves two steps:
Step 1: Is it SR&ED ?
The Revenue Canada Agency (1) recognizes as scientific research and experimental development (SR & ED) any investigation or systematic research of a scientific or technological nature, carried out by means of experimentation or analysis, such as:
(a) basic research, namely, work undertaken for the advancement of scientific knowledge without a specific practical application in view,
(b) applied research, namely, work undertaken for the advancement of scientific knowledge with a specific practical application in view, or
(c) experimental development, namely, work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto.
AS Accounting & Tax Services has the expertise and experience to help you determine the eligibility of your work and maximize your credits.
Step 2: What expenses qualify?
For any work to be admissible:
- it must be commensurate with the needs of the basic research, applied research, or experimental development work undertaken in Canada. In other words, it must be corresponding in the amount, size, extent, or duration of work that is necessary to carry out basic research, applied research, or experimental development work undertaken in Canada.
- It must be directly in support of the basic research, applied research, or experimental development work undertaken in Canada. That is to say, the work was carried out specifically to perform the related basic research, applied research, or experimental development work undertaken in Canada.
- Eligibility of work for SR&ED investment tax credits
- It must be with respect to one of the eight categories of work listed below:
- operations research;
- mathematical analysis;
- computer programming;
- data collection;
- psychological research.
How much you could obtain ?
Use our calculator CALCULATOR for an overview of available credits according to your income and expenses.
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