Claiming SRED Tax Credits?
There Is Free Information & Help!
Finding free help for your SRED claim can be near impossible, however the CRA has many free resources for first time claimants and those that have previously filed a claim. Some of the information available on the CRA site includes:
- Who can claim SR&ED tax credits
- How a SR&ED claim can be made
- How to prepare for a SR&ED review
- Understanding eligibility requirements of a project
There are also several videos, online tools, and information webinars on specific areas of the SRED program for free. To get started, simply visit the CRA site for the SR&ED income tax credit program.
Although there is free information on the program for the ‘do-it-yourself’ types, having an expert SRED consultant will ensure that your claim is complete, well documented, and accurate. This type of quality and expertise in an claim is the key to getting all the tax benefits that you’re entitled. With a number of unique plans for payment, including payments after a successful application, using an expert SRED consultant is a no-brainer.
The SR&ED Technical Review: A Guide for Claimants
The SR&ED Technical Review Guide, released by the CRA in 2015, is a concise guide on the process that the CRA undertakes when internally reviewing any SR&ED claims. It’s highly beneficial to any organization looking to put together their own scientific research and experimental development claim, to read through the guide and fully understand the process that one must follow when claiming SR&ED tax credits.
Note that the newly updated guide has cancelled and replaced the “Guide to Conducting a Scientific Research and Experimental Development Review” that the CRA released back in the year 2000.
The new guide is packed with helpful materials, including questions used to help determine eligibility of projects for SR&ED tax credits. Some of the sample questions in the guide include the following:
- Was there technological or scientific uncertainty?
- Was a hypotheses formulated; specifically aimed at eliminating the above mentioned uncertainty?
- Did the approach of the project remain consistent with a systematic search; testing the hypotheses through analysis or experimentation?
- Was the project undertaken to achieve a technological or scientific advancement?
- Was there a complete record or work progress kept; from hypotheses to testing, and to the breakthrough?
Not only does the guide help those that are starting a SR&ED claim, it also contains information about the process of reviews; specifically technical and financial reviews that are usually done on projects that have SR&ED claims.
The entire SR&ED process can be quite a consuming task for an organization; this is why many organizations find SR&ED consultants to be invaluable. Not only do SR&ED experts provide assistance with the technical and financial reporting necessary for your SR&ED claim, but also help you to identify qualifying activities or projects. Finally, having a skilled SR&ED consultant will give you peace of mind with your claim, as any CRA audits or rejections of claims will be defended or appealed on your behalf.
Federal SRED Legislative Changes
There have been a number of changes to the SR&ED program as it relates to tax credit amounts. These changes were first introduced in 2012, and have recently come into effect under Bill C-43. The new changes in the program aim to focus the tax credits solely at the project, rather than capital expenditures.
Announced changes include:
- Capital expenses no longer will qualify towards SRED tax credits
- The overhead SRED expenditure rate through the proxy method of claiming will be reduced from 65% to 55% over two years.
- Third-parties and contracts towards SRED expenditures will only be eligible for a total tax credit of 80%.
- The 20% credit for SRED expenditures will be reduced to 15%
There are a number of other changes to the SR&ED program, and changes that will continue to be rolled out in the coming years. It’s important to read and understand the full legislation, or use a SR&ED consultant that will be able to give you the expert guidance needed to fully explore the SR&ED tax incentive program.