Frequently Asked Questions (FAQ)
Is the SR&ED program a kind of grant, repayable loan or equity investment?
No. SR&ED program is neither of these. This is an Incentive Tax Credit (ITC) program that the government gives away to foster innovation and R&D in Canadian economy. Unlike grants that may be given to use for specific purposes, your cash refund or tax credit can be used with no restrictions. You are neither required to repay any portion of the tax benefit nor dilution will occur to your company's equity as a result of a participation.
We do not have R&D department. Are we still eligible?
Many potential claimants are under the impression that a SR&ED program is a purely research-driven within laboratory environment. In fact, over 90% of the claims submitted to the Canada Revenue Agency (CRA) fall within the area of "experimental development". If your company has adopted a systematic approach to its development of a product or process and required experimentation in an attempt to solve a problem, address technical uncertainty or progress with a project that is outside the norm of activities – you are likely eligible for the program.
How do we know that our projects are R&D?
SR&ED is different than what you may typically think of as 'R&D'. This program provides tax incentives for project's activities, such as prototyping, testing and developing technologically advanced products or processes. If you have any doubt whether your project is an R&D, you can call us for a FREE assessment with no obligation.
We didn't achieve the objective of our R&D project. Can we still claim for SR&ED?
Yes. CRA provides R&D funding regardless the project objectives are met. SR&ED can be claimed as long as their three requirements (technological uncertainty, technological advancement and systematic investigation) are addressed, regardless of whether or not the project objectives are met.
What is the refund on each expense that is incurred?
The refund rate depends on your corporate structure and also the type of expense being claimed. A typical Ontario-based CCPC, below the small business limit, can receive up to 68% refund on labour, 41% refund on materials and subcontractors, and 17.5% refund on capital equipment.
What is the refund rate for our company?
It depends on your corporate structure. Small Canadian Controlled Private Corporations (CCPCs) receive Investment Tax Credit (ITC) refund rate of 35%. Publicly traded firms, foreign owned companies, sole proprietorships and partnerships receive a 20% tax credit.
But we haven't paid our taxes yet?
That's OK, your company is still eligible. Even if you are in a loss position, Canadian Controlled Private Corporations (CCPCs) are still eligible to receive a refund on their SR&ED expenses.
We have already received government funding, can we still claim?
Yes. Claiming other government funding does not exclude your company from benefiting in the SR&ED program. Generally speaking, IRAP payments will be deducted from SR&ED returns.
When is my SR&ED claim due?
You have 18 months from the end of your fiscal year to file for SR&ED. This is a firm deadline and all claims must contain the specified CRA documents to be considered complete. You can amend an existing tax filing any time prior to the end of the 18-month period. If you fail to submit the complete documentation by the deadline, your claim will be disallowed and no refund will be given.
If I claim an SR&ED project, will my business be subjected to a tax audit?
No. We have not ever experienced an SR&ED claim triggering a company audit. The reviews for the SR&ED claim are separate from those of the CRA audits. The objective of the CRA tax auditors is to recover tax dollars from taxpayers. The objective of the SR&ED program is to encourage technical innovation in Canada. However, this doesn't mean that CRA does not have the right to perform an audit.
What Research Project is Eligible?
The following categories of eligible research activities:
1. Experimental Development : Work undertaken for the purposes of creating new, or improving existing materials, devices, products or processes, including incremental improvements thereto.
2. Basic Research : Work undertaken for the advancement of scientific knowledge without a specific practical application in view. Work undertaken for the advancement of scientific knowledge with a specific practical application in view.
3. Applied Research : With respect to engineering or design, operations research, mathematical analysis or computer programming and psychological research, these activities must be undertaken directly in support of the aforementioned types of research to be considered eligible.
What expenses are eligible?
There are many expenses that are eligible for an SR&ED claim. Some of these costs include:
What activities are eligible?
There are many activities that are eligible for an SR&ED claim, regardless achieving the desired goal. Some of these activities are:
What is your success rate?
We have extensive experience with unparalleled success record in filing SR&ED claims. We successfully secured millions of dollars in SR&ED tax credits for our clients. We guarantee 100% result.
We are a start-up company or our firms have been losing money for the last several years, can we file a claim?
Absolutely, regardless if you are a start-up firm with zero revenue or a firm who has been losing money for many years, you can claim SR&ED and receive significant refund.
What can we expect from Kingsway Consulting?
You can expect superior service, exceptional expertise, dedication, commitment, unmatched accuracy, and on-time delivery while maximizing your claim.
Please contact Kingsway Consulting for a FREE, no obligation consultation with one of our SR&ED experts.