Optimal Solution Inc.
Governmental Grants, Low-Interest Loans for Private Companies
Frequently Asked Questions about Scientific Research and Experimental Development (SR&ED) program.
1-What is SR &ED?
2-Who qualifies?
3-What work is eligible for SR&ED?
4-What is not SR&ED?
5-How much does your service cost?
6-How long does it take to prepare an application?
7-How long does it take to receive the cheque after a claim submission?
8-How many years back the R&D activities can be claimed?
9-What is the size of an average SR&ED government refund / tax credit?
10-Do you guarantee confidentiality?
11-Will my entire business be audited if I submit a claim?
Q. What is SR&ED?
A. Scientific Research and Experimental Development (SR&ED) is a multi-Billion ($ 4 Billion) annual incentive program that is funded by both Federal and Provincial Governments of Canada. It supports all Canadian private companies to conduct research and experimentation in Canada by refunding significant amount of their annual R&D expenses.
Q. Who qualifies?
A. The SR&ED program is available to any business operating and carrying out R&D in Canada. Certain expenditures for SR&ED performed outside Canada are now permitted.
Any business that is involved in basic or applied research, or in advancing technology in order to improve or develop new materials, devices, products or processes may be eligible under the SR&ED program.
The businesses that are eligible under the SR&ED program fall into three groups:
1. Canadian-controlled private corporations;
2. Other corporations; and
3. Proprietorships (individuals), partnerships and trusts.
Q. What work is eligible for SR&ED?
A. For any R&D work to be eligible for SR&ED:
The work must be a systematic investigation or search carried out by means of experiment or analysis;
This would include identifying the obstacle, formulating an objective, developing a plan of action including the method of experimentation or analysis and testing the hypothesis.
The work must be carried out in a field of science or technology that is not excluded by the legislated definition of SR&ED;
AND the work must be undertaken either:
For the purpose of achieving technological advancement. The work must attempt to increase the technology base or level from where it was at the beginning of the systematic investigation or search. The technology base or level includes all the technological resources within the business and all the knowledge on the technology that is reasonably available in the public domain.
For advancing scientific knowledge. A systematic investigation or search must be carried out with the aim of generating new scientific information or understanding of scientific relations.
Q. What is not SR&ED?
A. Certain work is not eligible for benefits under the SR&ED program, including:
Market research or sales promotion;
Quality control or routine testing of materials, devices, products, or processes;
Research in social sciences or the humanities;
Prospecting, exploring, or drilling for, or producing minerals, petroleum or natural gas; Commercial production of a new or improved material, device or product, or the commercial use of a new or improved process; Style changes; and
Routine data collection.
Q. How much does it cost for the company to apply for SR&ED?
A. It is a win-win agreement. We will take the risk and upon successful claim’s transfer of funds and/or the credit from the government, will you be charged a reasonable percentage.
Q. How long does it take to prepare a claim?
A. after the initial evaluation meeting, we will indicate if your company is eligible to receive any assistance. If you qualify, it may take 1-2 months after signing the contract to prepare all the financial and technical documentations for submission, if all required information is provided by you.
Q. How long does it take to receive the cheque after a claim submission?
A. It will takes between 3 to 8 months for CRA to process your application. This period depends on the particular circumstances of your corporation, your fiscal year end, the time of submitting your application and on the nature of the claim.
Q. How many years back the R&D activities can be claimed?
A. At least one and at most past two fiscal years may be claimed to yield maximum refund.
Q. What is the size of an average SR&ED government refund / tax credit?
A. Refunds often vary from $10,000 to over $500,000. The amount depends on several factors, including the nature of business, the scope of the R&D projects, and the size of the associated payroll.
Q. Do you guarantee confidentiality?
A. Absolutely. Your information is highly protected forever by both CRA and Optimal Solution Inc too, by signing a Non-Disclosure Agreement between us and each client that may want.
Q. Will my entire business be audited if I submit a claim?
A. Not at all, only the SR&ED claims and its associated costs will be reviewed by the CRA. SR&ED reviewers are a group separate from the regular CRA auditors.
