Did you know that the SR&ED tax rebate is underclaimed in the engineering sector? That means that businesses are missing out on a valuable benefit that could give them a competitive edge.
The reason that engineering companies entitled to claim the SR&ED benefit miss out may be because there is a lack of clarity around the definition of R&D. The Canadian Government’s definition is actually broader than what many engineers would usually consider to be R&D. So, to clear things up, here is a definition of R&D for the purposes of SR&ED.
What is R&D, according to the SR&ED program?
The SR&ED program exists to promote innovation and to encourage Canadian businesses – including engineering firms – to pursue technological advancements.
Work that qualifies for SR&ED would be activities and projects that involve technological advancement and scientific uncertainty.
Such activities include:
- Basic research (work done to progress scientific knowledge with no particular reason)
- Applied research (work that progresses scientific knowledge with a specific purpose)
- Experimental development (work that aims to attain technological advancement by improving an existing product, procedure, system, or practice or introducing a new one)
The project should aim to achieve technological advancement by resolving a technological uncertainty through systematic investigation.
What are some examples of engineering projects that qualify for SR&ED?
The types of engineering R&D projects that might be eligible for the Canadian SR&ED program include:
- a project to improve or develop construction equipment
- a bridge design intended to meet a specific seismic requirement
- a novel computer numerical control program
Is my engineering company eligible for an SR&ED grant?
In short, companies based in Canada developing a technology by experiment or analysis, or improving a material, device, product or process, are eligible for the tax rebate worth hundreds of thousands of dollars.
If the answer to some of the following questions is yes, we strongly recommend you investigate your eligibility for SR&ED tax relief:
- Have you dedicated resources to develop new solutions to client issues?
- Have you developed innovative approaches to solve industry issues?
- Have you responded to changes in environmental regulations with product or process updates that were ‘outside the box’ compared to an industry standard solution?
- Have you solved an unexpected technological issue that arose when you made changes to production processes?
- Do you have engineers, technologists or scientists on staff?
The work needs to be a systematic investigation that follows a structured approach to problem solving. The project will have to include scientific or technological principles. And also, the activities need to be recorded.
Use our engineering sector tool to quickly assess your R&D project’s eligibility for SR&ED.
How engineering companies can claim the SR&ED tax relief
The SR&ED tax rebate is claimed from the Canadian Revenue Agency (CRA) after you’ve filed your company’s taxes. There are strict deadlines for SR&ED claims, and if you miss them, you miss out on the rebate.
The claim process is somewhat complex, and you’ll need to maintain records during the work you are claiming for.
Although the CRA offers a Self-assessment and Learning Tool (SALT) to pull together a report about the eligibility of a project, many engineering companies prefer to engage an accountant who specializes in SR&ED claims.
Canadian SR&ED’s accountants and consultants have a reputation for getting claims for engineering companies like yours approved. We work on a contingency basis, so there’s no need to pay until your company has received the refund. Book a call to explore how this benefit could help your engineering company thrive and grow.
Innovation brings so many benefits to the Canadian economy
Change the world with your bright ideas and innovations – give them every advantage by applying for the SR&ED tax rebate.
Soutenir les entreprises qui contribuent au monde grâce à la R-D