SR&ED financial aid to companies that make new technological discoveries
SR&ED are a very important and significant financial aid to companies that make new technological discoveries. They exist in Canada and help promote growth through the development and marketing of innovative new technologies.
It works almost like a tax credit that companies in the US receive. In Canada, qualified companies receive a check from the government for up to 70% of all salaries of those involved with the development of these new software and technologies. This saves companies a significant amount of money because they can save themselves from having to pay almost 70% of these employees salary. This is a significant incentive and profit booster for Canadian companies.
Government checks also usually cover up to 22% of equipment used to develop new technology and pays nearly 50% for contractors that are used throughout the process. Many different types of companies are eligible to receive these government benefits including imaging companies, software developers, IT specialists, telecommunication companies, ecommerce companies, game companies, genetic imaging companies, and fuel cell companies. More are eligible.
Only private Canadian companies can receive these checks. However, the Canadian government does offer SR&ED tax credit to public companies or non-Canadian companies with similar benefits. This allows other companies to maintain similar profit benefits.
It is important for companies to understand that these incentives are not to be available for typical work that is already well understood and about which there is much information. These kinds of incentives are for new, cutting edge technological advancements and procedures that not much information is available for. The point is to encourage companies to expand and discover and research. Things that are not eligible generally include pre-set tasks that follow a mundane and well-known protocol.
In order to be approved for SR&ED incentives, a company must base its findings purely on experimentation or research that is not publicly available. This includes any information that is easily available on the Internet, in encyclopedias, or in textbooks.
Typically, if a company can demonstrate why their work was relevant, why the work was innovative, how employees learned from the task, and why the task was difficult, they can become eligible for a check. Of course they must also meet the requirements described above. Essentially, the government chooses not to analyze your work and determine your eligibility, but asks you to demonstrate why you deserve the incentive.
These types of incentives are not only extremely beneficial; they are very necessary to encourage this type of research to continue. It is these types of donations that keep companies eager to develop and research and experiment and come up with new ways of doing things. Of course, this kind of study only furthers the advancement of society and helps initiate the kind of progress we need. Problem solving and innovation are two ways to ensure we continue to progress. We are certainly better off because of these types of programs and these types of jobs and it is a good thing if the government can help keep these companies performing. These checks are a great way to promote this type of research.
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R&D tax regulations and reporting requirements increase in complexity each year, it becomes ever more difficult for individuals and corporations to stay ahead of new developments. SR&ED consultant service providers could help provide relevant tax advice and preparation to keep ahead of government requirements.