Businesses in Canada involved with experimental development or scientific research may apply for SR & ED tax credits. It is the federal government's single biggest incentive program for promoting and supporting R&D projects in the private sector. Any Canadian business of any size from any industry may claim refunds and/or tax credits for qualified projects.
The agency in charge of administering the investment tax credit (ITC) is the CRA or Canada Revenue Agency. ITCs may vary depending on the applicant's business structure. CCPCs (Canadian-controlled private corporations) get a 35% ITC for the first CAD $3 million R&D spending. Anything in excess of this will earn a 20% ITC.
A corporation, proprietorship or partnership business will get a standard 20% ITC, regardless of the amount spent. Some trusts and proprietorship businesses may claim refunds if the ITC granted is more than the tax payable. Corporations cannot claim refunds against ITCs.
The government's definition for a qualified project includes tech advancement related experimental development. Applied research for developing specific applications and basic research done where no application is to be developed are both valid projects. Support work done for any of these qualified projects can be included.
Spending that can be shown on the claim includes material, equipment and machinery purchase. Wages for personnel working on the project can be included, along with certain other overheads. Market research cannot be part of the claim, and neither can implementation of a new process or commercial production expenses for materials and products.
sr & ed tax credits can be obtained by filling up and filing form T661 along with the returns. The T661 will have to be accompanied by the form T2 SCH 31 if it is a corporation that is applying for the ITC. Individuals will have to fill up the T2038 form. Claims have to be filed within a year and a half after the taxation year in which the expenses took place.
The agency in charge of administering the investment tax credit (ITC) is the CRA or Canada Revenue Agency. ITCs may vary depending on the applicant's business structure. CCPCs (Canadian-controlled private corporations) get a 35% ITC for the first CAD $3 million R&D spending. Anything in excess of this will earn a 20% ITC.
A corporation, proprietorship or partnership business will get a standard 20% ITC, regardless of the amount spent. Some trusts and proprietorship businesses may claim refunds if the ITC granted is more than the tax payable. Corporations cannot claim refunds against ITCs.
The government's definition for a qualified project includes tech advancement related experimental development. Applied research for developing specific applications and basic research done where no application is to be developed are both valid projects. Support work done for any of these qualified projects can be included.
Spending that can be shown on the claim includes material, equipment and machinery purchase. Wages for personnel working on the project can be included, along with certain other overheads. Market research cannot be part of the claim, and neither can implementation of a new process or commercial production expenses for materials and products.
sr & ed tax credits can be obtained by filling up and filing form T661 along with the returns. The T661 will have to be accompanied by the form T2 SCH 31 if it is a corporation that is applying for the ITC. Individuals will have to fill up the T2038 form. Claims have to be filed within a year and a half after the taxation year in which the expenses took place.