Canada has a tax incentive program known as SRED or to give it its full name – the Scientific Research and Experimental Development program.  The Canadian government is keen to encourage Canadian based companies to invest in scientific research and development.

This is a very tax advantageous system that has seen the Canadian Revenue Authority (CRA) give over $4million tax back to Canadian companies in 2010.

Whilst in theory, the SR&ED program is quite simple.  Invest in the appropriate research and development and receive up to 35% of your expenditure and some overheads back in tax rebates.  Understanding the thousands of pages of compliance details and completing the four complex forms is daunting.

Additionally the SR&ED program requires that all costs are assigned to specific categories and that all work is allocated to a project.

Whilst most tax returns are completed and reviewed by accountants and tax professionals, the SR&ED program is one activity that really requires an expert in research, an engineer or an experienced SR&ED engineer.

Accountants are experts in finance and they may not understand the complexities of research on a particular project.  So whilst an accountant may look at a component being researched or produced and see just one activity, an experienced SRED  consultant will look at the same component and see many different processes or procedures that are contained within the component.  This means that the accountant will see only one set of processes and materials, whist the SR&ED engineering consultant will see many more complex processes and activities within the one component.  This means that more processes, materials and working hours can be identified that meet the requirements of the SR&ED tax program.  The more of these that can be found, analysed and documented in the correct format, the more tax rebate the company earns.

Generally, the CRA reports that nearly 25% of SR&ED tax claims are incorrect, so it makes sense to use a professional SR&ED engineering consultant to ensure that these complex tax forms are correctly completed.

The SR&ED tax forms are generally 15% accounting information and 85% technical information so a technically experienced SR&ED engineering consultant can add considerably to your tax rebate success rate.

The CRA has set quite wide definitions of research and development and also provides tax rebates on some research and development overheads.  Many companies do not realize the full activities that they may include on their tax forms and are thus losing out on potential tax rebates.

Evamax SRED Consultants, based in Mississauga, Ontario have helped many Canadian companies receive SR&ED tax rebates, which means they will be best placed to help a company maximize their SR&ED tax rebates.