About SR&ED

"The Scientific Research and Experimental Development (SR&ED) Program provides more than $4 billion in tax incentives to over 20,000 claimants annually, making it the single largest federal program that supports business research and development (R&D) in Canada. The program is administered by the Canada Revenue Agency (CRA)."*^[1]

The SR&ED program is designed to help businesses of all sizes and in all sectors to develop intellectual property. By offering tax inventives, the SR&ED program encourages businesses to use research and development to achieve scientific and/or technological advancements.

In order for work to be eligible for the SR&ED program, it must involve a systematic investigation that achieves technological advancement, meaning it must result in an increase in the understanding of scientific or technological knowledge beyond the firm's pre-existing knowledge base of technological principles, techniques, and concepts.

In addition to the monetary incentive, adherence to the SR&ED program requirements can be beneficial in many other ways.

The requirements of the SR&ED program create a clear need to use an overall approach that is consistent with a systematic investigation or search. In addition, experimental development requires that a claimant formulate and test hypotheses by means of experiment or analysis and that quantifying indicators and measures are used to determine the effect of experimentation, along with trials and testing and to indicate when the objectives(s) have been achieved. These requirements enable a firm to gain and retain more knowledge from tests and experiments.

CRA guidelines also encourage claimants to give more thought to the project planning stage than they might otherwise, and to formulate a well-structured and well-documented project plan. This approach safeguards the knowledge that has been gained and provides ongoing access to this data, allowing for further reference, sharing and analysis of experiments and conclusions. In turn, this access to data provides an increased opportunity for input from other staff members both during and after the project, and can also be an extremely valuable tool during the employee training process.

When staff members who may not be normally viewed as part of the development team are allowed to provide their valuable project vision and input, great assets in project planning and implementation can be revealed. Some of our clients are surprised by the input they receive from members of their staff when they use this approach, and they often discover that they have untapped assets in people whose innovative thoughts have been seemingly hidden from them for years. Such shared vision and collaboration amongst the staff also often creates improved team morale and effort.

Nathan and Segal offers assistance through all parts of this process, including project planning, documentation, accounting, filing, and CRA reviews if they occur. We work diligently to help ensure that our clients comply with the SR&ED program guidelines and that all of the qualifying work is properly captured in the SR&ED claim.

* British Columbia, Alberta, Yukon, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Newfoundland & Labrador also have tax incentives for SR&ED activity. For more information refer to Government of Canada's Summary of provincial and territorial research & development (R&D) tax credits - As at June 30,2017.

[1] From Evolution of the SR&ED Program - a historical perspective. Date modified: 2015-04-07