SRED grants refer to refundable (cash) tax credits given by the CRA to award companies for conducting R&D work in Canada. SRED grants are distributed through the Scientific Research and Experimental Development (SR&ED) tax credit program. The SR&ED grants are distributed by a stand-alone division within the Canada Revenue Agency (CRA).
SR&ED grants are the most extensive tax credit program in Canada. $3 Billion is distributed to 20,000 companies in Canada annually through the SR&ED program. Most of the money awarded through the SR&ED program is given for the ED part of SR&ED, meaning experimental development.
Many companies initially believe that they will not qualify for SRED grants because the term R&D conjures up images of lab workers in white coats doing complex research. The truth is that many businesses have “pockets” of SR&ED activity going on in their business at any given time and are unaware that they do indeed qualify for the program.
In general, if any part of your business activity involves experimentation to solve an unknown, there is an excellent chance that your company may qualify for SRED grants.
Connect with our R&D tax credit experts to learn how easy it is to qualify.
SRED grants are distributed in arrears based on expenditures incurred while doing qualifying work. In other words, SRED grants are not given because you plan to do the work but instead awarded to offset expenditures already incurred when you did the work.
SR&ED grants can be significant. Canadian Controlled Private Corporations (CCPCs) can receive up to 70% of qualifying salary expenditures and 40% of qualifying subcontractor and materials costs back as credits.
Use This SR&ED Calculator to Estimate the Credits Your Business May Qualify For
Awarded yearly, SR&ED grants are typically filed with your corporate taxes. However, you can file for SR&ED grants up to 18 months after your fiscal year-end.
First-time SRED grant claimants must first go through the First Time Claimants Advisory System (FTCAS.) This program consists of a meeting between the CRA and a business owner to go over the program, allowing the government to outline SR&ED best practices.
It is important to note that this meeting occurs AFTER the company’s SRED grant is AAF (Accepted as Filed). There is no risk of business owners losing the grant based on this meeting. However, the FTCAS meeting provides the CRA with an opportunity to conduct a risk analysis to determine if they will audit future claims from the claimant.
Canada has one of the most generous SR & ED tax credit programs globally, administered through SRED grants. Based on overall compensation per dollar of R&D spend, Canada ranks 9th globally according to the OECD and 1st among G7 countries. SRED has been in place since 1985 and is still going strong in 2022 as Canada’s largest tax credit program.
SR&ED tax credits help not only claimants they also serve to better society. These grants encourage innovation, technological advancement and the pursuit of technological and scientific knowledge by companies of all sizes. These discoveries and ideas may lead to Canadian economic growth and competitiveness on the world stage.
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 S&ED calculator to get an idea of how big your SR&ED cheque could be