Aggressive offshore competition isn’t new to us here. Let’s face it – it can be tough to survive when products similar to yours can be purchased for a fraction of the price from a company that doesn’t even operate in Canada. This can lead to a huge reduction in sales, can result in non-profit situations, and can cause difficulties for any company that is trying to remain competitive. In some cases, this causes business closures.

Businesses need to do what they can to offset those financial situations, and reclaiming costs for projects where you faced challenges can help your company become profitable again.

The SR&ED (Scientific Research and Experimental Development) program can definitely assist in situations like this – a lot of expenses can build up through test runs, failed projects and lengthy experimentation, and reclaiming some of these costs can make a very large difference in a company’s financial standing. The recovered costs can help offset the effect that offshore competition may have on your business, and can be used to invest back into your company.

Have you taken a look at how SR&ED can help you remain competitive with offshore competition?

We often tell people that failed projects are embraced by the SR&ED program, and sometimes it can be a little hard to understand exactly why. I mean, isn’t the program meant to promote innovation, and to encourage technological development? If so, then why are projects that don’t result in a more innovative product or process applicable for the SR&ED program?

This goes back to the three criteria of the program: Technological Advancement, Technological Obstacles and Technical Content.

When looking at a failed project, you most likely faced a number of Technological Obstacles while working on it – these obstacles are anything that prevented you from getting to the final objective, so obviously in a failed project you faced a number of obstacles.

The technical content shows the systematic investigation that was done while trying to reach the final objective, which would be done for both failed and successful projects.

Lastly, your knowledge has been expanded in the instance of failed projects as well – in these instances, you now have the knowledge that there is no way that you have found to get to the final objective.

So yes, failed projects definitely qualify for the SR&ED program, as long as they too fulfill the three criteria of the program.

With the number of government grants, loans and other assistance available, we have frequently been asked whether companies can still file for the SR&ED program if they’re taking advantage of other assistance programs. There are so many different programs available: from IRAP, to small business grants, to funding that will help make things more energy efficient, to workshare programs, just to name a few.

So what does this mean when a company files for the SR&ED program? CAN a company get money back through the SR&ED program if they’ve already received some sort of government assistance for the project?

Well, the short answer is both yes and no.

Mainly, it depends on how much of your project was covered by other government assistance programs. If your project was fully-funded by other grants and loans, then your project is unfortunately not applicable for the SR&ED program.

Or, as it more often happens, if your project was only partially funded by the government, then you can claim for SR&ED on the portion that was not funded.

The SR&ED program is vital for any Canadian business doing work that runs into technological obstacles – don’t forget to include it in your funding plans.