The Scientific Research and Experimental (“SRED”) tax incentive program, at the federal as well at the provincial and territorial level, encourages Canadian business of all sizes to conduct research and development in Canada.
The SRED program is a generous program – however a SRED claimant must prove that he/she or it has met the requirements to claim a cash refund and/or tax credits.
SRED claims are often refused on the grounds that the requirements of the program have not been met. Common issues cited by the CRA include a failure to comply with the contemporaneous documentation requirement and the failure to convince CRA that the R&D was not simple routine engineering.
The contemporaneous documentation requirement dictates that a SRED claimant must be able to prove that R&D was carried out through a paper/electronic trail. Further, the claimant must show that the time claimed was spent on the R&D.
In order to qualify under the SRED program, at both levels of governments including the territories, the claimant must also show that the R&D carried out was not simple routine engineering. There must be an advancement in the general understanding of that field of research.
Finally, please note that TaxChambers LLP only assists in the defence of a SRED claim.
For further information on this specific area of practice, please contact our specialized and dedicated tax lawyers:
TaxChambers LLP is collaborating with Andersen Global® in Canada.