Fabrication companies frequently encounter technical challenges that cannot be resolved using standard manufacturing knowledge or established industry practices. Whether developing new welding processes, forming methods, automation systems or production technologies, many fabrication businesses undertake research and development activities that may qualify for SR&ED tax incentives.
A tax credit for fabrication research and development
When this work addresses a technological uncertainty through systematic analysis and testing, it may be eligible for the Canadian Government’s SR&ED tax credit.
Use our calculator to find out how much an SR&ED claim could be worth to your fabrication company.
Fabrication research projects that could be eligible for SR&ED
Companies specializing in fabrication have historically represented an established category of the SR&ED claims that the CRA reviews each year.
These are examples of projects that might be eligible for the SR&ED program.
Robotic welding automation
A fabrication company develops an automated robotic cell for complex, highly variable weldments.
Technological uncertainties exist in whether the robot can compensate for dimensional variation in fabricated parts, and whether weld quality can be maintained without manual intervention. There is also uncertainty about how best to integrate sensor feedback into the control system.
To meet these challenges, the fabrication company takes a systematic experimental approach to developing machine-vision systems, creating adaptive welding algorithms, building and testing prototypes and conducting quality validation trials.
The company could potentially make an SR&ED claim with this robotic welding project.
Novel forming process
A metal fabricator attempts to develop a process to form complex shapes without cracking or excessive springback.
There are some technological uncertainties in whether a new tooling design can achieve required geometry and how forming parameters affect material behaviour.
The activities in this project that may be eligible for SR&ED are:
- tooling development
- press trials
- material testing
- measurement and analysis of formed parts
Although the fabricator’s novel forming process works, it is found that tolerances cannot be maintained at production scale. Despite this, the novel forming process project is still potentially eligible for the SR&ED program.
If you have questions about the eligibility of a custom fabrication project for SR&ED, talk it over with an advisor.
How do I prepare my SR&ED claim for the CRA?
Businesses wishing to claim an SR&ED tax credit typically have their senior financial and technical personnel do it at the same time as filing the annual income tax return. The process involves:
- identifying work that is eligible for the SR&ED program
- grouping the work into projects
- describing the SR&ED work
- calculating expenditures
- claiming a deduction and earning an investment tax credit
It is really important to maintain technical and financial documentation that will support your claim, and it helps if these are part of your project’s procedures.
There is a strict deadline for making an SR&ED application, and companies cannot make claims once the prescribed deadline has passed.
We would recommend getting advice on your claim at an early stage in the R&D project.
Our advisers can offer end-to-end support in making your claim, and Canadian SR&ED is a low-risk way of accessing expertise in the process because our fee is a percentage of the successful claim.
For support with your SR&ED claim, get in touch for an initial consultation, with no commitment and no fee.
Supporting business that contribute to the world through R&D