Background
- The Government of Canada provides tax incentives to encourage Canadian companies of all sizes and in all industry sectors to conduct Scientific Research and Experimental Development (SR&ED). These tax incentives come in three forms: an income tax deduction, an investment tax credit (ITC), and, more commonly, a refund.
- The SR&ED Program provides more than $3 billion in tax incentives to over 20,000 claimants annually, making it the single largest federal program that supports business R&D in Canada, in addition to further provincial incentives. The program is administered by the Canada Revenue Agency (CRA).
- Most claims made by small businesses are for Experimental Development. Experimental Development is work undertaken to create or incrementally improve products, processes, materials and devices.
- Projects are evaluated in terms of the program’s three criteria: evidence of a systematic investigation within the context of the business, technological uncertainty, and technological advancement.
- Scientific Research and Experimental Development Tax Incentive Program.
Your projects may be eligible if you:
- Attempt to overcome limitations in the existing technology or extend capabilities (don’t know and cannot look it up, not in a datasheet);
- Conduct trials, experiments, or analyses to solve these problems; and
- Require knowledge, experience or technologies not readily available to your company to solve these problems.
Even if your project is unsuccessful, you may still qualify if you spent time and money on it. Finding out what does not work is useful knowledge!