The Scientific Research and Experimental Development (SR&ED) program is one of the most lucrative incentive programs for companies working on technological development and product/process improvements. SR&ED can generate tax credits up to 68% on eligible labour costs.
An analysis by the Canada Revenue Agency (CRA) showed that only 50% of eligible Ontario manufacturers have filed SR&ED claims. It might not always be apparent that activities you are performing on a routine basis can qualify for SR&ED tax credits. One thing to keep in mind is that the work you are performing has to meet 5 main criteria as outlined by the CRA:
- Technical Advancement
- Hypothesis formulation
- Procedure consistent with Scientific Method
- Technical Obstacles
- Technical Content
When it comes to applying for a SR&ED tax claim, it is important that you have a good understanding of the program. By focusing on your business you might not always have the time to learn about what is eligible for the SR&ED program, or to keep up with all the program changes that occur throughout the years.