For many years Canadian companies lagged behind other members in the G7 in their proportional spending on research and development. The Canadian governments have committed to increasing the amount of research and development performed in Canada as a means of stimulating Canada’s economic development and of creating jobs for technical personnel who might otherwise become part of the Brain Drain.
At Sloan Group, we have developed a comprehensive analytical approach to ensure that companies are aware of the benefits of the program, how to determine if their work qualifies, and the procedures to ensure successful tax credit applications.
There are three basic requirements:
- Work must be performed in Canada;
- Companies must be aware that they are performing SR&ED;
- Companies must apply for the tax credits
The second requirement is, perhaps, the most onerous since much of the work that qualifies for SR&ED is not what many consider to be scientific research. We have assisted clients who are unsure if they have a valid claim to undertake a determination. In some cases, we have been able to assist our clients to separate their activities so that the research component can be identified for tax credit purposes.
Examples of the work that qualifies for SR&ED includes:
- Development of software used in the management of spas and hair salons;
- Formulation of new food recipes or improving the shelf life of old recipes;
- Modification of a paint formulation to increase the ambient temperature at which it can be applied
Lastly, it is not necessary for the research to be successful to qualify for the tax credits since, as, in all research efforts, the final outcome is affected by technological uncertainty. Failure also has its scientific benefits.
For more information or to arrange a confidential appointment, please contact Jerry Paskowitz, CPA, CA, CMC at 416.665.7735 or by email email@example.com.