We have had some people contact us with a question about whether non profit organizations (NPOs) can claim for the SR&ED program. The short answer is, unfortunately no. However – corporate clients or partners can.
Why is this?
The CRA states that only business and corporate tax-payers (including Canadian-controlled private corporations, public and foreign-owned companies) can claim for the SR&ED program. While NPOs do file income tax returns, most are tax-exempt. As the SR&ED is an ITC (tax credit – sometimes refundable, depending on the business), this means that there would be no taxes to apply the ITC to.
by: Arnold Strub, MBA.
Entrepreneur-in-Residence, DeGroote School of Business, McMaster University.
Strub’s Pickles had already been a successful small business for 75 years when we were first contacted by an SR&ED consultant. We had the usual skepticism about the program; SR&ED is limited to lab work (of which we had little), tracking projects would be too time consuming, the cost/benefit would not make it worth the effort, and that after 75 years we likely had no SR&ED. How wrong we were!
After spending an initial hour with the same consultant, our skepticism was turned to optimism. Long story, short, we have since filed successful SR&ED claims for annual 6-figure refunds.
There are 5 reasons why you NEED to implement a culture that includes SR&ED in your food manufacturing enterprise:
1. An excellent source of funds for the continued development and improvement of your products.
2. It expands the development process outside the lab and onto the production floor and into the boardroom, creating stronger and more meaningful relationships throughout the enterprise.
3. It expands the development process to include your Supply Chain and your Customer Chain, creating valuable vertical strength and synergies amongst your key partners for future growth.
4. An expanded SR&ED process works hand-in-hand with your HACCP and Food Safety initiatives and requirements, optimizing both streams effectively.
5. Better Profits.
Strub’s Pickles was started in 1929. Arnold Strub worked in the family business for years before joining the Northbridge Consultants team.
Nortel is in the news again!
A giant in the IT Industry and Canada’s one time largest employer have been force to sell off it’s assets due to bankruptcy. This time it is their wireless network infrastructure to Nokia Siemens Networks. IT is an industry ripe with innovation and Canada needs innovation in order to compete in the world marketplace. How can Canadian Industry compete with cheaper overseas labour and the economic down turn? Many companies turn to government programs like the SR&ED (Scientific Research and Experimental Development) tax credit program to help fund their innovation.
Many SME’s in Ontario capitalize on the 41.5% return on labour and material costs incurred from R&D. It is important to talk to an expert in SR&ED to gain the most from a your claim. An SR&ED consultant can assess if you actually have SR&ED eligible projects, what you can expect to get in return and prepare you for future SR&ED claims. Claiming SR&ED on a yearly basis can reap financial rewards for your company’s innovation and keep you manufacturing in Canada.
Without a consultant you could end up claiming less than you otherwise would have. The CRA, who administers the program, has said that a majority of the claims they see claim far less than what they should. You may not be able to identify all the projects that qualify, where a consultant can be that second pair of eyes that can catch any additional projects. A consultant should look at all the areas in your business and not the areas that are most prevalent with SR&ED activities. Areas that have SR&ED some of the time may incur the most labour and material expense because SR&ED does not happen there regularly. Most importantly a consultant works for you and it is in their best interest that you have a viable SR&ED claim – that way you will continue to claim for years to come.
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