The Advantages of the Scientific Research and Experimental Development Program
The Scientific Research and Experimental Development (SR&ED) Tax Incentive Program is a federal program that takes the form of a tax credit. However, provincial governments do offer their own credit which adds up to the federal credit. It is one of Canada’s most popular program thanks to its numerous advantages.
Which companies are targeted by the program?
The answer is simple, any company that is working or has worked on a project that qualifies as research and development (R&D) is eligible to the program. According to the Canadian government, R&D work falls into one of these three categories:
- Basic Research
- Applied Research
- Experimental Development
The first two categories include work where the advancement of scientific knowledge is the primary objective. The third one, the most common R&D work, looks to achieve technological advancement. The most important aspect of any R&D project is that it needs to be innovative.
One of the strong points of the program is that, if a project qualifies as R&D, any Canadian-controlled private company is eligible. The program is open to companies from every sector of operation. In fact, a lot of companies from sectors not normally associated with scientific research or experimental development. For example, a security guard company was able to benefit from a tax credit when they created a platform that allowed them to contact their employees according to their availability, all of this in an automated fashion.
How much can I get from this program?
The other aspect of the SR&ED program that makes it popular is the potential tax credit that could be available. The tax credit can cover up to 65% of expenditures incurred during the project. Salaries, contracts as well as materials expenditures are the most common type of expenditures in a R&D project and are all eligible. The money saved thanks to the program can be beneficial in keeping the project going or starting a new one.
To summarise, the SR&ED program is accessible to a large variety of companies and brings in a strong financial support to any project.
Paul Laflamme
Partner