SRED grants refer to refundable (cash) 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 largest tax credit program in Canada. $3 Billion is distributed to 20 000 companies in Canada annually though the SR&ED program. The vast majority of money awarded through the SR&ED program is given for the ED part of SR&ED, meaning experimental development. Many companies do not initially think that they 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 might qualify for the program. In general, if any of your business activity involves experimentation to solve an unknown there is a great chance that you qualify for SRED grants. Contact an expert for a free consultation to determine if the program can be right for your business.
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 rather awarded to offset expenditures that already occurred when you did the work. SR&ED grants can be very lucrative. Canadian Controlled Private Corporations (CCPC’s) can receive up to 70% of qualifying salary expenditures, and 40% of qualifying subcontractor and materials costs back as credits. Here is a calculator to input expenditures and receive an estimate of SR&ED credits.
SR&ED grants are awarded yearly, and are most commonly filed with your corporate taxes, however you can file SR&ED for a fiscal year up to 18 months after your year end for that period.
The first time SRED grants are applied for, claimants must 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 and gives an opportunity for the government to inform a business about the best practices when it comes to SR&ED. It is important to note that this meeting takes place AFTER the businesses SRED grant is AAF (Accepted as Filed). As such business owners do not need to worry about getting the SR&ED grant they applied for as a result of this meeting. The FTCAS meeting serves for the CRA to conduct a risk analysis to determine if they will audit future claims for the claimant.
Canada has one of the most generous R&D tax credit programs in the world through SRED grants. On the basis of overall compensation per dollar of R&D spend, Canada ranks 9th in the world according to the OECD and 1st among G7 countries. SRED has been in place since 1985 and is still going strong in 2021 as Canada’s largest tax credit program.
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