The SR&ED program offered by the provincial and federal governments is an under-used and even more under-utilized program.
According to the CRA there are currently, in Canada, only about 50% of eligible companies taking part in the SR&ED program. In 2007 that figure equated to 18,000 companies and $6 Billion dollars being paid out. In that number we must understand that almost all of the large corporations are claiming. When you factor these numbers together you get an average claim amount of $333,000. However, the first thing that must be understood is that the average SR&ED claim is not $333,000. What has happened is that the large corporations are all taking advantage of the program and inflating the average claim amount. The “smaller” companies, between 10 and 100 employees, are failing to take advantage of the program thus putting them in an even further competitive disadvantage.
I have just explained how so many companies are “under-using” the program but what do I mean by “under-utilize?” Well, just because a company is taking part in the SR&ED program does not mean that they are utilizing it to the best of their ability. This is a major reason to involve a specialized consulting firm in your SR&ED process. The companies who are utilizing this program to its fullest are now able to take on projects that they wouldn’t normally because they know that 41.5 cents on every dollar will come back to them via SR&ED. These companies are doing things such as maximizing labour cost recovery, keeping machinery up to date and in good working order, continuous process improvements to stay ahead of the competition and being proactive with technological advancements in their specific field of work. While many companies simply claim projects that have already been completed and do not plan ahead in order to capitalize on this program, companies should be looking to take on projects that are claimable. It’s an easy way to recoup 41.5% of all cost associated with the project. Another benefit of the SR&ED program is that it allows companies to grow technologically even during slow times. Instead of laying off employees, as so many have had to do in the last 18 months, these companies can have their employees doing R&D related projects. These companies can receive back 41.5 cents of every dollar that each employee earned, which can make the difference between keeping your staff working or not.
We at Northbridge Consultants are here to assist your business succeed and allow you to grow faster than the competition. We can assist you in maximizing the SR&ED program and generating a significant amount of cash that goes directly to the bottom line. Our staff has expertise in all industries which ensures that you will receive advice and consultation from industry specific experts. Feel free to give us a call today.