What is SR&ED

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WHAT IS SR&ED?

SR&ED stands for Scientific Research and Experimental Development. It is a program in Canada that encourages businesses to conduct research and development (R&D) activities by providing tax incentives. The program is designed to help Canadian businesses remain competitive by supporting innovative projects that can lead to new or improved products, processes, or services.

To be eligible for SR&ED tax incentives, a business must:

- Conduct R&D activities that meet the criteria set out by the Canada Revenue Agency (CRA).
- Be a Canadian-controlled private corporation, a trust, a partnership, or a Canadian resident that performs SR&ED work in Canada.
- Own the results of the SR&ED work.

Under the SR&ED program, businesses can claim tax credits for eligible expenditures related to R&D work. These expenditures can include salaries, wages, materials, and overhead costs directly related to the SR&ED work..

Overall, the SR&ED program is meant to encourage innovation in Canada and help businesses grow and succeed by supporting their R&D activities.

SR&ED stands for Scientific Research and Experimental Development. It is a Canadian tax incentive program designed to encourage businesses to conduct R&D activities in Canada by providing tax credits. The program aims to support innovation and technological advancement in Canada by helping businesses reduce their costs of developing new products, processes, or services.

To qualify for SR&ED tax credits, the R&D activity must meet the criteria set by the Canada Revenue Agency (CRA), which includes the activity being conducted in Canada, having scientific or technological advancements, and having technical uncertainties that require a systematic investigation.

The SR&ED tax credit provides a refundable tax credit up to 35% of eligible expenditures incurred in conducting SR&ED activities. Eligible expenditures include salaries, wages, materials, and overhead costs directly related to the SR&ED work. The program also offers a variety of other tax incentives, such as a 100% deduction of eligible expenditures in the year incurred, and an investment tax credit for equipment and machinery used exclusively for SR&ED activities.

Overall, the SR&ED program is designed to encourage and support businesses in conducting R&D activities in Canada, ultimately leading to the growth of the Canadian economy and the development of new technologies and innovations.

The SR&ED Tax Credit is a 15% to 35% ITC for a companies qualified SR&ED expenditures. This Tax Credit has an expiration date of 18 months from the end of your companies fiscal year end.

“Scientific Research and Experimental Development (SR&ED)” means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis and that is:

Basic research, namely, work undertaken for the advancement of scientific knowledge without a specific practical application in view, Applied research, namely, work undertaken for the advancement of scientific knowledge with a specific practical application in view, or Experimental development, namely, work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto, and, in applying this definition in respect of a taxpayer, includes Work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing or psychological research, where the work is commensurate with the needs, and directly in support, of work described in paragraph (a), (b), or (c) that is undertaken in Canada by or on behalf of the taxpayer,

but does not include work with respect to:

Market research or sales promotion,
Quality control or routine testing of materials, devices, products or processes,
Research in the social sciences or the humanities,
Prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas,
The commercial production of a new or improved material, device or product or the commercial use of a new or improved process,
Style changes, or Routine data collection