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Are you looking for ways to grow your business and recover costs from your R&D efforts?
For businesses across Canada engaged in scientific research and experimental development, finding ways to recover R&D expenses and fund the rest of your company’s operations is essential for its growth. The Scientific Research and Experimental Development (SR&ED) program is an extremely valuable tax incentive designed to help companies pursue innovation while alleviating some of the higher costs associated with operating in uncertain and more technological fields.
Some costly misconceptions can often lead to businesses missing out on valuable tax credits. Below, we’ll cover some of the most common misconceptions to be aware of when filing for SR&ED. Read on to learn more!
SR&ED is Only for Large Corporations
Smaller organizations often assume they must meet a certain size threshold to qualify for the SR&ED program. While larger companies conducting R&D may be eligible for a larger refund (purely dependent on operations and qualifying expenditures), small and medium-sized businesses are equally eligible. As long as you engage in qualifying scientific research or experimental development, you can benefit from the SR&ED program.
SR&ED is Limited to Scientific Research
Given the program’s name, it’s somewhat understandable that people occasionally misconstrue SR&ED as only applicable to scientific research conducted in laboratories. In reality, the SR&ED program is open to a wide variety of industries and activities, including software development, agriculture, clean technology, engineering, and more. SR&ED recognizes and rewards technological advancements and innovation across various sectors.
SR&ED is Too Complex to Navigate
Applying or filing for any government initiative is rarely without certain intricacies that need to be considered and some unique challenges to consider. SR&ED is no exception, but it is far less difficult to file than you might think. For first-time filers or those looking to increase their return this year, partnering with a reputable consultant is a great way to make sure that your claim contains all of the pertinent details, is up to date with current standards (SR&ED can occasionally update qualifying standards), and sufficiently proves how your operations align with the objectives of the SR&ED program.
SR&ED is Only for Successful Projects
Many eligible companies mistakenly believe they can’t file for SR&ED due to a lack of successful outcomes. Fortunately, success isn’t a requirement to receive a SR&ED tax credit. The SR&ED program focuses on supporting the process of experimentation and innovation, regardless of the outcome. Whether your project succeeds or fails, you can still claim eligible expenditures incurred during the research and development process. After all, sometimes failure is just as valuable when it comes to learning more about technical uncertainties.
SR&ED Only Covers Direct Costs
Despite the misconception that SR&ED only covers costs related to labour and materials, the program encompasses a wide range of expenditures, including overhead costs, and contractor fees. When filing for SR&ED, businesses should be aware of what is eligible to be claimed to ensure they don’t miss out on available funds.
You Can Only File for SR&ED Once
Another common misunderstanding businesses have is that they can only file for SR&ED once. Fortunately, this couldn’t be further from the truth! The SR&ED program allows eligible businesses to make claims for qualifying activities conducted throughout the years. This means that businesses can leverage the program year after year as long as they engage in eligible research and development activities.
You Can’t Finance SR&ED
Yes, you can, and Venbridge is here to help! Venbridge is here to partner with SR&ED applicants to ensure you have capital you can depend on when it matters most. We believe that having access to reliable venture debt solutions you can trust is essential to growing your business, and we approach our partnerships with the perspective of a fellow leader within the innovation and technology sectors. We offer access to an expansive funding pool that allows you to finance your SR&ED credit and get the capital you need to grow your operations while keeping your equity.
Learn how we can partner with your team to enhance your R&D initiatives through venture debt lending by contacting our team today!
