WHAT IS SR&ED?
The Scientific Research and Experimental Development (SR&ED) Program is a tax incentive program established by the federal government to encourage Canadian businesses of all sizes and in all industry sectors to conduct research and development (R&D) in Canada that will lead to new, improved, or technologically advanced products, processes, principles, methodologies, or materials.
Administered exclusively by the Canada Revenue Agency (CRA), the SR&ED program is the single largest federal government support that assists Canadian companies with financing their R&D initiatives. In fact, the Canadian government has awarded in excess of $4 billion in Investment tax credits (ITC) to over 18,000 claimants annually for R&D activities conducted as part of their daily operations. Of these, approximately 75% are small businesses.
SR&ED tax incentives come in three forms: an income tax deduction, an investment tax credit (ITC) and in some cases, a refund.
WHY IS IT IMPORTANT?
The convergence of globalized commerce and rapid technological progress has created a fiercely competitive landscape which demands businesses prioritize innovation to stay relevant. This innovation imperative has forced companies to evolve constantly in order to stay ahead of the technology curve. Failure to do so often results in plateauing growth which can ultimately lead to a business becoming obsolete.
To strive and thrive, businesses must make themselves newly relevant by conducting research and development. This however can be a costly activity. As a result securing capital is crucial to a business’s survival. The Canadian government recognizes the innovation imperative and its importance to Canadian economic growth and prosperity. As a result, the government of Canada provides support through the SR&ED program encouraging Canadian businesses to participate in R&D activities. The importance of innovation being part of a company’s culture has become evident. Only if a business makes a conscious commitment to be innovative will it grow and succeed in today’s economy.
CRI can offer expert advice to help you obtain SR&ED funding you need to gain a competitive edge.
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