The Scientific Research and Experimental Development (SR&ED) Tax Incentives are complex and require in-depth knowledge of the SR&ED tax system. To meet Canadian Revenue Agencies (CRA) guidelines, a company must understand all forms needed for submission, SR&ED eligibility (the proper documentation), how to submit correctly, etc. This can be cumbersome for many companies, as finding the quick and easiest way to file is always top of mind.

The Quebec government has announced its new strategy for research and investment in innovation. Called SQRI², this action plan, estimated at $7.5 billion, will run from 2022-2027. The goals of this measure are to improve business productivity and reduce the gap in GDP per capita with Ontario in order to ultimately increase the prosperity and wealth of Quebec citizens.

SR&ED, CDAE and Multimedia tax credit systems can seem complex, because they combine legal, financial and scientific notions. They are thus at the intersection of skills and professions that are rarely supported by the same interlocutors within a company.

In an article penned to newswire on April 6th, 2022, by Canada Revenue Agency (CRA), CRA has unfortunately seen an increase in fraudulent/false information provided with the SR&ED Tax Credit. CRA wants to assure everyone that many Canadian companies are filing correctly but it is something that they are closely monitoring. With that in mind, how does this effect your companies next SR&ED Claim?

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?