SR&ED Articles
SR&ED Program can be Vital for Competitiveness
The Need for SR&ED
Participation within the SR&ED program is a vital activity for nearly any company wishing to remain competitive. The Scientific and Experimental Development Tax Credit Program (SR&ED) can provide plastics manufacturer’s with up to 41.5% of all investment costs allocated to technological development and research.
A recent study held by the Canada Revenue Agency (CRA), the body responsible for administrating the SR&ED program, showed that only 50% of eligible Ontario manufacturers filed SR&ED claims! Why are these companies not filing for SR&ED tax credits?
A recent survey conducted by Northbridge Consultants has showed that many manufacturing companies have a tendency to significantly under-report their SR&ED activities. Why are these companies filing for amounts far below what they deserve?
Not Receiving What You Should?
The reasons are multi-faceted, and often involve:
- A misunderstanding of SR&ED program guidelines and terminology;
- Difficulties interpreting the ‘gray area’ when SR&ED project eligibility is defined;
- An inability to apply the program guidelines effectively.
The Value of Research
When it comes to filing for SR&ED, it pays to do your homework. Any weaknesses in claim preparations typically result in losses of tens, or hundreds of thousands of dollars in potential savings.
To ensure that your company is achieving maximum benefit, from SR&ED, you must allot considerable time for your employees to become thoroughly acquainted with the program. Otherwise, eligible SR&ED activities will be omitted from the claim, and your company will incur opportunity costs.
Maximize Your SR&ED Claim
Several companies chose to contract external consultants who typically achieve higher returns than on claims that are internally filed. However, you must research your options carefully to ensure that those who you contract will genuinely benefit your business.
The ability to leverage experience with technological and financial knowledge is paramount. Equally important is a proven track record. These criteria often come at a cost since consultant fees can reach as high as 41.5% of your return. However, in certain circumstances, a higher investment in an established consulting firm can easily be offset by the larger claim amounts (and subsequent ITC and/or cash refunds) the consultants will generate on your behalf.
