Technological Awareness When Claiming An SR&ED Tax Credit
By admin
Published On April 14, 2021
The SR&ED Tax Credit outlined by Canada Revenue Agency (CRA) can be a daunting task to understand and interpret into a successful cash or credit refund for your company. There are different percentages for the size of your company 35% or 15% and many factors and criteria that must be met by all companies to qualify. One of the most common questions we receive is technical eligibility. Many companies have the stereotype of “men in white coats”. This can be further from the truth as many industry sectors qualify for the SR&ED Tax Credit. To get started we will evaluate the 5 question test to determine technological eligibility as well as provide industry examples.
SR&ED 5 Questions Test
- Scientific or technological uncertainty – Was there Scientific or Technological Uncertainty (i.e. does technological risk exist in the project which cannot be removed with the application of standard practice or routine engineering work)?
- Formulating hypothesis – Did the effort involve formulating hypothesis specifically aimed at reducing or eliminating that uncertainty?
- Adopted procedure – Was the overall approach adopted consistent with a systematic investigation or search including the formulation and testing of the hypothesis by experiment or analysis?
- Technological advancement – Was the overall approach for the purpose of achieving scientific or technological advancement (i.e. technical advancement being sought – can be either negative or positive results)
- Documentation – Was a record of the hypothesis tested and the results kept as the work progressed?
A common oversight by many companies is disregarding project failures. When it comes to technological uncertainty, CRA is looking specifically for failures as it shows CRA that your project was not taken from an open-source network or is standard routine work. With a technological failure, CRA can identify your project, that was in theory supposed to go from point A to point B had many roadblocks along the way causing numerous trial and error. DO NOT BE AFRAID OF PROJECT FAILURES.
SR&ED Eligible Activities
- Developing new generic methods of capturing, transmitting, storing, retrieving or manipulating, searching, or securing data.
- Development of software to run new types of computer hardware, particularly where there are conflicts between hardware and software.
- Development of new programming languages or software development tools or the development of significant extensions to an existing language.
- Development of new software framework and/or architecture.
- Reducing the risk of spoilage/waste/contamination.
- Changing the properties of drink or food products for health reasons whilst maintaining the organoleptic characteristics such as taste/appearance/smell/texture.
- Modifying either the formulation or process of a product to enhance its shelf life appreciably.
- Developing the process to achieve consistent distribution of particles through a liquid product, whilst still meeting nutritional and clear declaration requirements.
- Extending knowledge on the effect on the appearance and organoleptic properties of product over life when exposed to different atmosphere and different packaging.
- Extending knowledge on the effect of different fermentation dough techniques on bread crust shelf life.
Please note that the above outlined SR&ED eligible activities are but a few examples CRA would deem a technological advancement. Further discussion with one of Braithwaite’s top PhDs, engineers, or developers would be needed for further qualifications.
How Can Braithwaite Canada Assist
Braithwaite Canada takes a 7 step approach to maximize every R&D Tax Credit Claim filed to CRA (Detailed description of the 7 step approach).
- Initial Exploratory Meeting
- Offer of Service & Presentation of Offer
- Kickoff Meeting & Preliminary Project Identification Stage
- Science Data Compilation Phase
- Financial Data Compilation Phase
- Project Review & Finalization
- SR&ED Claim Submission to CRA
For further information on how Braithwaite Canada can assist your company in successfully preparing an SR&ED Tax Credit claim to CRA, please contact us today.
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