Research rollbacks

November 2007 Article from CMA Management Magazine – "Canada has one of the world’s most generous tax-based incentive programs for encouraging research and development — the Scientific Research and Experimental Development (SR&ED) program. It was established in 1985 and is administered by Canada Customs and Revenue Agency (CCRA). Currently, over 11,000 companies file for SR&ED claims, which generate approximately $1.5 billion in tax credits annually.

The SR&ED allows qualifed Canadian-controlled private corporations a cash refund of up to 35% on their taxes, and public companies are entitled to a 20% non-refundable tax credit. Once you’ve applied for the program, it’s impossible not to see the benefits it brings to an organization. Companies that apply for both federal and provincial programs can recover as much as 50% of their SR&ED expenditures (Alberta and PEI are the only provinces that don’t currently offer an R&D tax credit)."

180 View (written by Esther Friedberg Karp) – It has been estimated that only 30% of eligible companies pursue the SR&ED credits. This program is often overlooked as a source of cash flow by companies and many accountants.

The CRA is not only offering money; it’s offering us help in applying for it. In addition to the assistance programs offered directly by the CRA, major accounting firms have set up their own SR&ED departments. Also, type “SR&ED” in any search engine and you’ll find many consulting firms who will take up your cause for a piece of the action.

The first step should be: get the free scoop from the CRA by signing up for a public information seminar. Use whatever resources they offer you, and then decide if your company has a shot at the money. You can decide whether you will go it alone (with CRA resources) or if you want to offload the work to a consultant for a piece of the action.