While many businesses may be surprised to learn that their work qualifies for Scientific Research and Experimental Development (SR&ED), a potential claimant would greatly benefit from the assistance of an experienced SR&ED claim preparer to maximize their claim value. When considering an SR&ED claim submission, there are three potential routes a business can take, but some of these options have significant drawbacks that can compromise a claim’s value or success.

For some decades now, companies established in several countries have implemented a transfer pricing policy in order to justify their intra-group transactions. The exceptional economic situation due to the health crisis has raised concreted issues regarding the application of transfer pricing rules.

Scientific Research and Experimental Development (SR&ED) can seem daunting to the uninitiated. Many business owners wrongly assume that the technical work they perform on a regular basis does not qualify for this tax incentive program. However, SR&ED serves to encourage businesses of all sizes and sectors to pursue technological advancements, and its eligibility criteria may be more inclusive than many expect. Consider the following when identifying potential SR&ED work in any field of technology:

A question we are frequently asked at ABGi Canada is about a company’s Intellectual Property (IP): If I own my IP or if my IP is owned by a subcontractor or third-party (university), can my company still apply for the SR&ED Tax Credit? In short, the owner of the IP will be the one eligible to make the SR&ED claim for the work done to generate the IP. To figure out who the owner of the IP is, we must know more about the terms of the contract between the involved parties. This is where we will find the differences between IP ownership with a subcontractor and with a third-party (university).

ABGi, already present in many countries around the world is settling up in Germany to support its clients in obtaining aids for their innovation’s projects. ABGI once again reinforces its international presence with the company Partner für Innovation & Förderung (PFIF).

Since the end of June 2021, The Government of Canada / Canada Revenue Agency (CRA) has introduced a new service to the SR&ED program. This new service is called the SR&ED Virtual Service Visit. The service is still in the preliminary stages but here at Braithwaite, we have already experienced some instances with our clients. Below we illustrate what to expect and some opinions we have moving forward.

Each industry faces its own challenges when filing an SR&ED Tax Credit Claim. There may be some activities that are easier to identify when claiming and others may be in a “grey area”. The examples below help illustrate a better understanding of the “grey area” to maximize your claim.

Have any of your products or processes taken more time to develop than you expected?
Did you have any failures in product or process development or improvement?
Have you used or combined technologies in new ways?
Have you developed prototypes?
If you were to develop subsequent models or designs, would they have new and different characteristics requiring multiple attempts?

Maintaining NRC IRAP (National Research Council Industrial Research Assistance Program) funding can be a challenge for businesses, especially for small and medium-sized enterprises (SMEs) in Canada. Here’s a breakdown of some key struggles:

The two most lucrative incentives for companies incorporated in Canada to take advantage of are The National Research Council of Canada Industrial Research Program (NRC IRAP) and the Scientific Research and Experimental Development tax credit (SR&ED).  Many companies are familiar with one over the other however are not aware that they can claim both incentives to maximize their research and innovation. Below is a brief comparison between the two programs as well as an example of how a company can claim both IRAP and SR&ED.

The SR&ED first-time claimant advisory service (FTCAS) was introduced by Canada Revenue Agency (CRA) in 2014. This is a free discussion to all first-time claimants on the SR&ED program that must be attended by all first-time filers. The discussion/meeting will assist all applicants in preparing future SR&ED claims regardless of using a consultant or filing in-house. Since this advisory service is fairly new, we have experienced many companies asking us questions about the FTCAS program. Below we have illustrated questions and concerns that many companies face with the FTCAS as well as how to be prepared when the CRA is asking for additional SR&ED documentation.

A CCPC is a Canadian-controlled private corporation with ownership in Canada. The CCPC is not registered on the stock exchange nor does it have ownership in a foreign country. With relation to the SR&ED Tax Credit, a CCPC will maintain its status as long as the taxable capital is less than $50 million.
A Non-CCPC can be a public company incorporated in Canada, owning shares on the stock exchange, having foreign ownership, or having a taxable capital larger than $50 million.