The SRED program is one of the most generous but confusing offered by the Government of Canada. It is generous in that it permits the recovery of a substantial portion expenses committed to SRED projects within a commercial establishment, but confusing in the minefield of rules and complicated interpretations often imposed by Government Officers.
Essentially anyone involved in legitimate innovation within their respective industries and possessing a level of technical expertise adequate to innovate by finding unique solutions to vexing problems within their industry may have a legitimate claim to consider. Recoveries of SRED expenses vary from 65% of wages of employees or management directly involved in a project for owner managemed business to 45% for contract expenses or materials consumed in experimentation.
The eligiblity hinges on three concepts, technological advancement, technological obstacles and systematic investigation. An advancement could be any innovation adopted by an enterprise in developing a product or process. The issue is that there must be a legitimate technological obstacle encountered in coming up with this innovation. There could be advancements that are minor and require little or know research or experimentation – these would not count. The obstacle cannot be resolved either easily or by the adoption of the an off the shelf solution. That is where the systematic investigation comes in. The resolution of the problem has to be found through experimentation – there must be failure before ultimate success. In fact, one need not even be successful. Determining what does not work is as important as determining what does.
If similar problems have been encountered, resolved and the resolutions published, clearly these would not qualify. The operative words are “Not Commonly Available”. A solution does not have to be unique ie- someone could have done it elsewhere, but it has to be proprietary, meaning that the company had to develop it independently since there was no off the guidance on its resolution available.
Additionally, the individual undertaking the experiment must be an expert in his or her field. A person cannot advance technology unless they have the expertise to do it – the person or people involved had the technical expertise to develop a proprietary solution.
As you can see, the program is confusing. An ill considered claim can be costly from a variety of points of view. It is time consuming to prepare, and can result in government review which consumes even more time. In the end, a poorly thought out claim can be far more trouble than its worth. We have the expertise to eliminate much of the uncertainty surrounding the process while maximizing your claim.