SR&ED (Scientific Research & Experimental Development) is a government program that rewards companies that perform R&D in Canada. The SR&ED tax credit program makes Canada a more economically competitive and technologically advanced nation and it has been in existence since the 80’s. The Canadian incentive program is one of the most generous R&D programs in the world.
The SR&ED program is not a grant, but strangely enough, does actually behave like a grant. Traditional grants are pre-approved before work commences. SR&ED grants are retroactive and approved after the fiscal year-end of the corporation
SR&ED Program for IT
There are many misconceptions about this area of SR&ED claims. Many claimants believe their work is eligible because they feel that they have developed an advanced piece of software that solves a business or real-life problems. Others feel that their software is “innovative” or “ingenious”. Just because you are developing software does not mean that you are advancing technology. Many software developers often find this difficult to accept.
As with most SR&ED claims, you will need to establish that you have technological problems, as opposed to technical problems. CRA may also take a narrow view of your work.
The Belize case is a good example of how far an IT company had to go to obtain an approval.
Standard software development, database development, business solutions, websites, are often ineligible. But your work could involve technological obstacles if presented properly to CRA.
Good examples of eligible IT work involve problems with encryption, compression, algorithms, logic, performance & quality issues, incompatibility issues, bleeding-edge state-of-the art IT, combinations of media types, and more.
Many incorporated IT & Tech companies qualify for the SR&ED Program
SR&ED Claim for IT Industry
If you answer yes to any of the following questions you could be sitting on an untapped refund.
- Is your hi-tech, IT or computer science company incorporated?
- Have you developed any state-of- the-art software or hardware?
- Does your work push boundaries in Information Technology or computer science?
- Does your work involve networking infrastructure, encryption, e-commerce or computer languages?
- Does your work involve applied mathematics or novel algorithms?
- Do you encounter technological or scientific uncertainty with devices or computing technologies?
SR&ED Eligibility for IT & Tech
There are only 3 criteria for eligibility plus evidence.
- Scientific uncertainty obstacle
- Scientific advancement
- Systematic investigation
- Scientific content and evidence