At Viewin Advisory Services, we understand that successfully claiming Scientific Research and Experimental Development (SR&ED) investment tax credits (ITCs) hinges on accurately determining the context and nature of the work performed. Our expertise helps ensure your SR&ED claims are compliant and optimized for maximum benefits.
Key Factors to Consider in SR&ED Projects
Who Executes the SR&ED Work?
Is the project executed entirely by the payer, the contractor, or collaboratively?
Does the contractor's team include Canadian employees or personnel from outside Canada?
Where is the Work Conducted?
Is the SR&ED project carried out:
Fully in Canada?
Partially in Canada and outside Canada?
Entirely outside Canada?
What Activities Qualify?
Does the work meet the definition of SR&ED under subsection 248(1) of the Income Tax Act (ITA), such as:
Pure or applied research or experimental development?
Directly supporting activities like engineering, testing, or programming?
Activities outside SR&ED’s scope, such as troubleshooting or adaptation?
Are the Efforts Documented and Eligible?
Does the project involve advancing technology or solving technological challenges?
Are there comprehensive records of time spent, challenges encountered, and knowledge gained?
Challenges in Determining Eligibility
Certain aspects of SR&ED claims can create uncertainty:
Contracts may lack clarity on whether the work is done on behalf of the payer or the contractor.
Determining the start and end dates of SR&ED work can be challenging when key details are undocumented.
Pre-existing knowledge or tools used by the contractor may obscure the SR&ED efforts’ uniqueness.
Tax Considerations for Contract Work
When claiming SR&ED expenditures, it’s important to differentiate between:
Arm’s Length Contractors: Payments to these contractors for work done in Canada qualify for ITCs.
Non-Arm’s Length Contractors: These expenditures are deductible but do not qualify for ITCs.
Understanding these distinctions can significantly impact your claim’s outcome.
Our Approach to SR&ED Projects
At Viewin Advisory Services, we guide businesses through the complexities of SR&ED claims by:
Reviewing Contracts: Ensuring clarity about SR&ED responsibilities and deliverables.
Organizing Documentation: Helping businesses maintain accurate records of time, activities, and technological progress.
Providing Compliance Insights: Advising on ITC-eligible expenses and deductible costs for contractors.
Optimize Your SR&ED Claims with Confidence
Viewin Advisory Services is your trusted partner in navigating the intricacies of SR&ED tax credits. With our expertise, you can ensure compliance, maximize eligible claims, and focus on innovation.
Contact us today to learn how we can assist with your SR&ED projects!