Scientific Research and Experimental Development (famously initialized as SR&ED) is a Canadian tax relief program that offers significant support to organizations, businesses, and individuals specialized in scientific development projects.
The Canada Revenue Agency (CRA) controls the program, which scrutinizes firms that apply for support and tax relief before releasing the finances. SR&ED has benefited many relevant companies, although some miss out on the opportunity due to an unsuccessful application process.
The SR&ED program provides free finances that benefit every eligible scientific business. However, it’s the business, organization, or individual’s duty to apply and go after the finances with determination. If you’re looking forward to benefitting from the program, make proper documentation your best friend.
This blog will outline various tips for successfully applying for SR&ED in Canada.
Tip #1: Who Can Apply for SR&ED?
Unfortunately, not all businesses are eligible for SR&ED in Canada. Only science-related ones can apply for the support, although they don’t all qualify. The CRA has specified that companies or organizations under the following categories are eligible for SR&ED:
Basic research
These organizations focus on enhancing scientific knowledge through research and experiments without practical application.
Applied research
Applied research refers to businesses that conduct scientific research to improve knowledge through specific practical applications.
Experimental development
Experimental development institutions conduct scientific research to acquire technological enhancements and create new opportunities, products, and materials while working on the existing ones.
Research
Support research organizations focus on reinforcing other research such as data collection, psychological research, engineering, mathematical analysis, and operations research.
Tips for SR&ED Application
Applying for SR&ED appears challenging if one doesn’t follow the proper techniques. Luckily, experts come with more accessible ways to apply and benefit from SR&ED without much stress. These tips will save you plenty of time to be used in other businesses.
They also protect amateur companies from falling into shady deals from scammers who pose as SR&ED agents while they aren’t.
Seek SR&ED consulting services
You can find consulting service providers in nearly all industries that you encounter. Working with a consulting agent during the SR&ED application can facilitate a quicker process and achieve more outstanding results. SRED consultants function like mentors, guiding their clients through applying for the program and overcoming possible challenges.
There are many SR&ED consultants in the market, but you need to be sure you’re working with a reputable one. An experienced and qualified consultant boasts numerous referrals and recognition in the CRA.
Time-tracking tools
You should track your precious time when applying for SR&ED to achieve a smooth and exciting process. Without the time-tracking tools, you might be rotating around similar steps that you would have otherwise finalized. The tools are designed to monitor and track time across different phases of the SR&ED application.
TimeCamp is used to track time during the SR&ED claim process using keywords with the help of other tools such as BaseCamp and Trello. Harvest is another time-tracking tool for SR&ED that offers answers to various questions that the applicant might be asked during the process.
Lastly, Toggl is an SR&ED time-tracking tool that enables applicants to watch their time for free throughout the application process. It incorporates skills from other time-tracking software programs such as BaseCamp and Trello.
Maintain confidentiality
The saying goes, “people cannot ruin what they do not know.” As you maneuver through the SR&ED application, maintain confidentiality throughout the process for more remarkable results. Confidentiality, in this case, means you should avoid discussing technical matters over text messages, WhatsApp, or email.
Alternatively, you can use communication-tracking tools to monitor your engagement throughout the application process. The tools protect the details shared between you, consulting agents, SR&ED mentors, and any other party.
Some popular communication-tracking tools are Slack, which incorporates all essential communication requirements under one roof, from direct messages to video chats and emails, and HipChat, which offers unmatchable security for user details.
Keep your crucial documents safely
Proper documentation always makes the process much easier. Similarly, the SR&ED application requires storing crucial documents safely for easier retrieval and quicker processing. Make it effortless for the CRA representative to evaluate all your documents in a single file.
Some standard SR&ED documents you need to file include the tax credit application, technical reports, lease agreements, or prevailing contracts. Others are business descriptions, business design, project planning documents, and any other document you may find helpful.
Start early enough and observe the timelines
Most SR&ED applicants fail due to the failure to observe its timelines. The program has crucial timelines between the application and approval process. Applicants should follow and deliver what’s required of them within the timelines; otherwise, they will be pushed to the subsequent windows.
Some crucial SR&ED timelines include a year to settle non-refundable SR&ED claims, two months to release funds to the applicants, 18 months in operation for corporates, and 17.5 months for individual applicants.
