Companies leaving money on the table

The federal government provides $2.5 billion dollars in funding claims made under the SR&ED tax credit program. It is estimated that there is almost $2.5 billion dollars in funding that goes unclaimed because companies are not aware of the program, or are not aware of the types of activities that are eligible for funding.

Misconceptions are preventing some taxpayers from claiming substantial refunds through SR&ED tax credit claims.

A common misconception is the belief that the SR&ED tax credit program was created exclusively for the high-tech sector. SR&ED is not performed in laboratories only. It can happen in an office behind a computer or on the shop floor. When modifying a product to make it more durable or precise or when altering an internal process to make it more profitable or efficient, workers are not necessarily “just doing their job.” The work they are doing may actually be experimental development and might qualify for an SR&ED tax credit.

Another common mistake relates to research ownership. Some taxpayers assume that since someone paid them to develop a custom product or process, their customer owns the technology and they cannot claim SR&ED tax credits on the work that they performed. This is not true in most cases.

Some companies are not filing because they believe they are not eligible for a refund because they are in a loss position and don’t pay income taxes. The program provides cash refunds to some companies that are in a loss position.

And the main culprit is…

For all the credit missed based on the reasons above, the main culprit might still be the complex nature of the claim process. Filing for an SR&ED tax credit requires a great deal of time, resources, expertise and commitment.

Learn how Braithwaite can help you obtain a tax credit without overburdening your internal resources. If you are interested in finding more answers to your questions and concerns read our FAQ or consult our knowledge library Strategies.