G6 Consulting Inc Canada's R&D Tax Credit Experts
SR and ED – Government Funding for R&D
What is sr and ed?
Sr and ed is short form referring to the Canadian governments scientific research and experimental development tax incentive program. The letters “sr” in sr and ed refer to the words scientific and research respectively, while the letters “ed” in sr and ed refer to the words experimental and development respectively.
Sr and ed, otherwise known as sred, SR&ED, or the scientific research and experimental development program is a $3 billion federal tax credit program administered by the CRA. Sr and ed is given to over 20 000 companies each year in Canada and is the largest tax credit program in Canada.
How much can businesses get through sr and ed?
Sr and ed compensates businesses for conducting R&D work in Canada. Sr and ed offsets costs incurred by businesses while conducting qualifying work in Canada. In terms of the amount of money that businesses can receive from the program, it is proportionate with the amount of qualifying expenditures that they have. Canadian Controlled Private Corporations or CCPC’s can receive up to 70% of qualifying payroll expenditures as well as up to 40% of qualifying subcontract and materials costs back through the sr and ed program.
Another important factor in favour of sr and ed government funding is that sr and ed investment tax credits are refundable. This means, that unlike non-refundable tax credits, sr and ed funding comes to the business owner as a direct deposit from the CRA rather than as a “credit” for a future tax deduction.
What is qualifying SRED work?
Any business in Canada can qualify for sr and ed so long as they are conducting qualifying work. When people think of sr and ed it is common to equate the program with R&D, however this is a common mistake. Sr and ed qualifying work differs from what people usually equate with what traditional R&D is.
In general, if some of your staff or a subcontractor employed by your business is engaged in solving a technological problem for which a solution is not readily available, there is a good change that they are doing SRED qualifying work.
Sr and ed refers the process of conducting experiments to make advancements against a technological unknown. For example, if a farmer does not know which type of fertilizer will be most effective for one of his crops, that is a technological unknown. If he then conducts an experiment by using different fertilizer on different sections of his crops, and measures the outputs, this is sr and ed qualifying work. Any staff required for the farmer to conduct this experiment can be claimed for 70% of their payroll expenses under the sr and ed program. The knowledge that the farmer gains through the experiment is the sr and ed technological advancement.
How to get sr and ed funding
SRED consultants such as G6 Consulting help companies get sr and ed funding on a 100% contingency basis. As a business owner, you explain the qualifying work to your sred consultant then provide them with the payroll information of the employees engaged in the claim as well as any subcontractor expenses. The sred consultant can then prepare your claim, complete the forms and submit your claim at no upfront cost. Once you receive your direct deposit from the CRA, the sred consultant will then bill you a fraction of the money that you received. Sred consultants are also by your side free of charge if your claim is selected for review.
G6 Consulting can work with you to build your claim, co-ordinate with your accountant, submit your claim and get you your cheque. No cost until you get paid
Check our our SR&ED overview page to learn more about SR&ED and how to qualify
Contact an Expert for a free no obligation consultation to see if your business can qualify
Check out our SR&ED calculator to get an idea of how big your SR&ED cheque could be
