RDP Associates Inc. is Canada’s leading SR&ED Tax Credit and Government Grant Consultancy (and one of Spark Centre’s Elite Partners!), dedicated to assisting startups with obtaining funding for innovation. Their experts advise and guide entrepreneurs on how to apply for government incentives and maximize their cash returns.
In the spirit of tax season, we asked Brian Cookson, President and Managing Director of RDP Associates, for his top tips for maximizing SR&ED and grant funding for your business.
SRED Tax Credits
This program refunds roughly 41% of eligible SR&ED costs and is designed to encourage companies to create and develop technologically advanced new products and processes. The average SME received $55K per year. CRA administers the program.
Many companies misinterpret the criteria as to what qualifies as SRED work. Companies tend to focus on the innovative features product or software. This is not the criteria but is the outcome of SR&ED. The key is to identify the technological uncertainty at the beginning of the SR&ED project. Without this, the claim is ineligible.
The chances of a CRA review of your SRED claim every 3-5 years is over 90%. On a review, CRA will ask for contemporaneous documentation to support the claim, such as documents recording the technological uncertainty when it arose. A good system to identify and track SRED is very helpful. RDP has such a system.
There are many activities and costs that are eligible for SRED. You want to ensure your claim includes all costs to which you are entitled. RDP has a procedure and checklist that maximizes your claim.
Grants
Canada has grants for R&D/Innovation; hiring/training; export, and expansion. Most companies say they don’t know how to find these grants. There are various online portals to help you navigate this landscape however, the best way is to have a discussion with a qualified grant service provider. This analysis can usually be done in a short call.
Once you find a grant, make sure you ask yourself the following before applying;
- What are my chances of success? Grant programs have limited funds; usually, only a small % of companies that apply receive approval. Find out what the program’s success rate is before you apply.
- Do I meet all the criteria? Make sure you meet all the criteria before applying. Meeting 4 of 5 criteria is insufficient and a waste of time to apply.
- How are you going to stand out? Grant programs are a competition, and program officials are looking for applications to support financially. You need to be concise and to the point on how the funding you might receive will benefit your company and Canada.
Want more information on SR&ED tax credits and grants? , CLICK HERE
***
