If my company is not currently profitable and does not yet pay taxes, are we still eligible for SR&ED?
Yes. SR&ED is a refundable tax credit, which means that you can claim it even if a company is not yet profitable.
Can I still claim SR&ED if my project was completely unsuccessful?
Yes. Failed, abandoned, or postponed projects still qualify for the SR&ED tax credit. The important thing is that development was performed with the intention of achieving a technological advancement, not that the advancement was realized.
How long does it take to receive a refund once my SR&ED claim has been filed?
If you submit your T2 Corporate Income Tax return and SR&ED claim together, it usually takes between two and three months to receive your refund.
My company has already received Industrial Research Assistance Program (IRAP) funding. Can we still claim SR&ED?
Yes, you can still apply for SR&ED. However, IRAP payments will be deducted from your SR&ED return to ensure that funding is not provided twice for the same project.
I just found out about the SR&ED program. Can I still claim expenses for work done in my previous fiscal year?
You can claim previous expenses as long they are claimed within 18 months from the end of the taxation year in which the expenditures were incurred.
A significant portion of our R&D was performed by contractors. Are we still eligible for SR&ED?
Maybe. There are limitations; you must retain the intellectual property or rights to the work that the contractors performed, and the subcontracts must be to other Canadian taxpayers with whom you deal at “arm’s length.”
What if similar products already exist? Is our work still eligible?
Maybe. The SR&ED program focuses on developments within a business context. This means that even if someone else has developed a similar product, your development work can still be eligible for SR&ED since the information regarding how the competing product achieved its goal (i.e., the process) is often proprietary. Consequently, two organizations may be next door to each other developing a product that produces the same result, but each organization will do so in a different way. If your neighbour is developing the same product as you, it shouldn’t matter when the CRA assesses the eligibility of your project—unless your neighbour’s is an open-source product!
What is the deadline for claiming SR&ED? How late can we submit our file?
The submission deadline for corporations is 18 months (individuals have 17.5 months) from the end of the taxation year in which you incurred the expenditures.
If I submit a claim for SR&ED, will it increase my chances of being audited?
No. Reviewers from the SR&ED program are completely separate from those who perform normal tax audits. They do not examine the non-SR&ED related aspect of your business.
Can companies claim both the SR&ED tax credit and the OIDMTC?
There is often a natural overlap between SR&ED and the OIDMTC for companies who develop interactive digital media products. A business can indeed claim both SR&ED and the OIDMTC for the same project, however they must split project costs between the two tax credits and ensure they are not claiming costs twice. It is advantageous to claim SR&ED costs first since the program provides a higher refund rate and has a much shorter processing time.