It’s actually pretty simple to see if your business is eligible for SR&ED. First, visit the Scientific Research & Experimental Development section of the Government of Canada website. Once you’ve done that and given it a good once-over, you’ll see that you have to satisfy 3 basic criteria to qualify:
- Technical Advancement: You need to have furthered some kind of technical knowledge
- Technical Uncertainty: You need to have faced some kind of technical challenge / tried to solve it
- Technical Content: You went through a process to try to mitigate or fix those technical challenges
CRA will ask you five questions:
- “Was there a scientific or a technological uncertainty that could not be removed by standard practice/engineering?” What technological problem did you solve?
- “Did the effort involve formulating a hypothesis specifically aimed at reducing or eliminating the uncertainty?” Here you’ll need to show – How the attempt was made attempt and your prediction as to the outcome before you began the work.
- “Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypothesis?” You need to outline your process here – kind of like you did when you learned the scientific method in middle school.
- “Did the process result in a scientific or technological advancement?” You’ll need to be able to show your process and tell CRA what advancement emerged. This is a highly technical piece, you will need need to discuss the technology you advanced.
- “Was a record of the hypothesis tested and results kept as the work progressed?” Make sure you can submit a timetable or some kind of time tracking, etc. They will want to see it.
In your claim, you are simply answering all of these questions. Once your claim is filed (or sometimes even before) and you have a refund on the way, you can apply for financing. This is done to reduce the time you have to wait for a refund – you can use the funds that you are owed immediately instead of waiting 180 days.
The most typical industries that qualify for the SR&ED credit program are:
- Software Development: Hardware Development, Firmware Development, Middleware Development, Platform Development, Mobile Communication & Development, Cyber Security
- Manufacturing: Wood, Paper & Printing, Automotive, Rail & Ships, Aerospace, Textiles, Clothing & Leather, Tool & Die
- Food, Beverage, & Agriculture: Food processing, Beverages, Agriculture, Beer & Spirits
- Chemicals, Plastics, & Rubber: Chemicals, Plastics, Rubber
- Life Sciences & Pharma: Biology, Medical Sciences, Pharma Research
- Banking & Insurance: Fintech, Software Development, Middleware Development, Platform Development
- Energy & Natural Resources: Power and Power Distribution, Wind, Solar, & Hydro, Oil & Gas
- Media & Gaming: Game Development, Interactive Digital Media, Animation, Film & Television
Remember, that once you file your SR&ED claim, you can finance your return and use it for growth now instead of waiting 180 days.