Are you aware of SR & ED?
(SR &ED stands for Scientific Research and Experimental Development and called SHRED by the those in the know – you are in the know.)
Did you know SR & ED is the easiest and most profitable sales you can make?
And did you know that most product development companies in Canada probably can make a sale?
Its not just for software companies and its not just for large companies.
Did you know the government returns you money you paid in salaries in new product development?
By the way – my self interest: I help companies write SR &ED submissions – so that why I know about this program.
But you don’t need me, I just make it fast and easy and don’t disrupt your company to get the SR & ED sale.
The SR & ED program is designed to reimburse that do research and development.
Many many companies do not know they can take advantage of the program because they do no think they qualify.
Many companies think its a lot of paper work.
In both cases they are wrong or at least don’t realize the value of the effort relative to the reward.
Its worth it – you can get something like 38% of the salaries you paid out back. and you can receive roughly 20% of the materials and equipment purchased
This is not a tax credit but a – CHEQUE.
Also -every I am writing here is just a VERY GENERAL outline, if it smells like work you are doing take the next step – but don’t spend the money yet.
If your company did anything similiar to the following check out if your qualify.
- You developed a new product that required you to create a new manufacturing process. Simple – but if you developed the process instead of buying an expensive machine – it may qualify!
- If you developed a new product and it was hard and not just sitting down and doing it – it may qualify.
- If your product development was estimated at 200 hours and took 2000 hours – it may qualify.
- If you needed to consult with outside experts – it may qualify.
- If you tried multiple different materials to get the product right – it may qualify.
- If you tried multiple designs to get it to work – it may qualify.
- You developed software or algorithms to solve a problem that didn’t exist before. It may qualify.
Some examples
- Developing a new flavour qualifies. Not the marketing costs, the design, testing and manufacturing.
- Taking scrap from your manufacturing process and making a new product – it can qualify
- Merging software packages to create a new software package that does things in new manner
- Software written under contract for another company
BIG NOTE: MARKETING COSTS ARE NOT INCLUDED. Sorry. Time spent by the marketing department reviewing product ideas – may qualify. Not time spent on market research. Time spent testing by customers for reliability and suitability does.
The basic requirements are:
- It was an advancement in technology – A new product solving a real life problem can in many cases be an advancement
- It was challenging for you and you are qualified to do it. If your staff has been doing similiar work for 5 years – you can be certain that the work qualifies.
- The work was done in Canada. If you did work here – but paid for engineering in Europe – your time qualifies – the engineering time may be an expense that qualifies
Over and over again I come across companies who don’t know they can We have helped a company receive a $500,000+ cheques they didn’t think they were qualified for.
We helped another go from $130,000 to $900,000 by forcing them to look at what they do.
A lot of companies for example think they need massive paperwork and other things.
Its not true. Just reasonable amount of evidence that the work was done by stafff appropriate to the work.
eg: the result its self, T4 stubs, time cards, software checkin/checkout, notes, scrap work, reports, emails, etc. all are good.
A good consultant (eg: like me – surprise) or a great staff member can write the content that is needed. A good accountant (like my partner) works with the numbers to work the claim.
The reason why a consultant is slightly better (and more expensive) is that accountant needs to see all the numbers, needs to ask hard questions, and needs to focus on the project. Internal people sometimes can’t or won’t ask why things were hard and why stuff failed. And for SR & ED failure is good. Its shows that stuff wasn’t easy. Can you imagine an internal guy asking why stuff failed? Everybody blames everybody – when it may be just hard technically – then somebody has to say “I didn’t know that”
Another reason is an outsider can see the difficullty while an insider thinks – “We solved the problem – what the big deal it wasn’t R & D”. We (and others do this all the time) moved one companies claim from 125K to 900K by asking hard questions.
SR & ED is not as painful as it seems to create it. And the numbers work real well.
Eg: Let’s say for $500,000 in bottom line income you need to sell $500,000,000 a 10% return – pretty typical for the kinds of companies I work with.
SR & ED can give you that return on $700,000 of money YOU HAVE ALREADY SPENT.
I think a controller or CFO should be FIRED if they don’t due the proper due dilligence in checking out if their company can claim SR & ED.
Was that a strong enough statement?
You can find out more at http://www.cra-arc.gc.ca/sred/
I highly recommend you review the program – its well worth the money.
Our expertise is with companies who have spent between $500,000 to $1,500,000 in projects in one year.
We take on the risk of doing the work, and are compensated when you receive your cheque from the government.
We typically do submissions for your last 2 fiscal years.
In the 3rd year – many executives have the confidence and the knowledge to do it internally.
We have worked with KPMG clients and some of the other bigger names in Canada.
There are others who will a great job on smaller assignments.
A lot of companies for example think they need massive paperwork and other things.
Its not true. Just reasonable amount of evidence that the work was done by stafff appropriate to the work.
eg: the result its self, T4 stubs, time cards, software checkin/checkout, notes, scrap work, reports, emails, etc. all are good.
A good consultant (eg: like me – surprise) or a great staff member can write the content that is needed. A good accountant (like my partner) works with the numbers to work the claim.
The reason why a consultant is slightly better (and more expensive) is that accountant needs to see all the numbers, needs to ask hard questions, and needs to focus on the project. Internal people sometimes can’t or won’t ask why things were hard and why stuff failed. And for SR & ED failure is good. Its shows that stuff wasn’t easy. Can you imagine an internal guy asking why stuff failed? Everybody blames everybody – when it may be just hard technically – then somebody has to say “I didn’t know that”
Another reason is an outsider can see the difficullty while an insider thinks – “We solved the problem – what the big deal it wasn’t R & D”. We (and others do this all the time) moved one companies claim from 125K to 900K by asking hard questions.
SR & ED is not as painful as it seems to create it. And the numbers work real well.
Eg: Let’s say for $500,000 in bottom line income you need to sell $500,000,000 a 10% return – pretty typical for the kinds of companies I work with.
SR & ED can give you that return on $700,000 of money YOU HAVE ALREADY SPENT.
I think a controller or CFO should be FIRED if they don’t due the proper due dilligence in checking out if their company can claim SR & ED.
Was that a strong enough statement?
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