Scientific Research & Experimental Development (SR&ED)

Contact Neufeld Legal PC for your incorporation legal work at 403-400-4092 or Chris@NeufeldLegal.com

The Scientific Research & Experimental Development (SR&ED) federal tax incentive program aims to encourage businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada. The program is administered by the Canada Revenue Agency.

The SR&ED program provides a tax credit that reduces a company's income tax payable. If a company doesn't owe taxes, the credit can be refunded. The credits can be claimed for eligible work performed in Canada on or after January 1, 2014. The program defines SR&ED as:

• Basic research: This is work undertaken for the advancement of scientific knowledge without a specific practical application in mind.

• Applied research: This is work undertaken for the advancement of scientific knowledge with a specific practical application in mind.

• Experimental development: This is work undertaken to achieve technological advancement to create new, or improve existing, materials, devices, products, or processes.

The Canada Revenue Agency has specific criteria to determine if a project qualifies for SR&ED, focusing on whether the work involved a systematic investigation or search carried out in a field of science or technology by means of experiment or analysis. This includes work carried out for the purpose of generating scientific or technological knowledge.

To qualify for SR&ED credits, the work must involve a technological uncertainty and a technological advancement. This means there must be a genuine question about whether a technological goal can be achieved and the work must lead to new knowledge or a new product/process. Eligible expenditures typically include:

• Salaries and wages for employees directly engaged in SR&ED.

• Contract payments to third parties for SR&ED work.

• Materials consumed or transformed in the course of SR&ED.

• Overhead expenses, which can be claimed under a proxy method.

Calgary-based corporations are capable of supplementing the federal tax incentives that they receive through the SR&ED program with Alberta's provincial counterpart, the Alberta Innovation Employment Grant.

As such, when your corporation is looking to optimize the availability of federal and provincial tax incentive programs, and other corporate tax strategies, your business can look to the Calgary, Alberta law firm of Neufeld Legal P.C. Contact us at 403-400-4092 or via email at Chris@NeufeldLegal.com.

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