Which are the specific challenges when claiming artificial intelligence, machine learning and Big Data projects with the Scientific Research & Experimental Development (SR&ED) program? Did you know that technology companies can be refunded up to 65% of their salaries invested in R&D in Ontario?
Salah Mahiout, Director of SR&ED and AI technologies for Emergex SR&ED Consultants will present this webinar, specially designed for information technology companies. He will highlight best practices to apply and common mistakes to avoid in order to optimize your SR&ED tax credit claims.
This presentation will be followed by a networking workshop.
Eric Martin, Professional Services Director at Emergex, will present this brief introduction to raise awareness among universities, research centers, incubators, associations and companies working in the field of quantum information on how to finance university research contracts within the framework of SR&ED tax credit claims.
LThe Scientific Research and Experimental Development (SR&ED) program is an innovation funding assistance program funded by the federal government and most of the provinces. In 2021, roughly $ 5 billion was distributed to 18,000 companies. In Quebec, it refunds up to 74% of the salaries of eligible technology employees. Under university research contracts, 43.6% of the sums invested are refunded.
Did you know that technology companies can be refunded up to 74% of their salaries invested in R&D in Canada? Interested? Then this workshop is designed for you!
The workshop
Pierre Savignac, founding president of Emergex SR&ED Consultants, will present the Canadian Scientific Research and Experimental Development (SR&ED) tax credit program, which distributes $ 5 billion to 18,000 companies each year. He will explain the eligibility criteria, reimbursement rates, the rules of contractual payment and a concrete case study in information technology. He will share his 25 years of experience through the labyrinth of a complex program in order to qualify a company and maximize results, while managing audit risks from the government.
During this 60′ workshop and after,Mr. Savignac has reserved 30′ to interact with you and answer your questions with his sound advice.
Is a bonus paid to a specified employee an eligible SR&ED expense?
Does your taxable income have an impact on the rate of the tax credits and on your eligibility for a refund?
Is the salary of an administrative project manager eligible as a SR&ED expense?
How do you structure a contract with a subcontractor or a client to make sure that it can be claimed for SR&ED
Is it necessary to own the intellectual property of the finished product to claim SR&ED?
Is work done outside Canada eligible for SR&ED?
Are SR&ED expenses that have yet to be paid eligible?
Can SR&ED tax credits be pre-financed?
If you don’t have the answer to all of those questions, you risk losing your full potential for tax credits.
This event will be held on Wednesday, November 17, 2021, from 9 am to noon at Emergex’s head office. As per public health requirements, a valid vaccine passport will be required to assist and participants will be required to wear a mask.
Please note that this event will be held in French. To reserve a spot, contact 514-765-3333 #320.
As in a familiar joke, there is bad news and good news for SR&ED in Alberta:
The bad news: since January 1, 2020, companies can no longer claim SR&ED tax credits from the Alberta government. The province previously offered a 10% refundable tax credit calculated on eligible R&D expenses.
The good news: on July 22, 2020, Alberta’s premier, Jason Kenney, announced a new provincial program effective as of January 1, 2021: the Innovation Employment Grant (IEG). Created to encourage innovation and economic growth in the province, the IEG provides small and medium-sized businesses with a refundable tax credit of up to 20% on their SR&ED expenses.
The IEG is calculated in two steps:
First, an 8% refundable tax credit on the SR&ED expenses for the current taxation year, PLUS:
An incremental 12% refundable tax credit on the portion of the SR&ED expenses that exceeds the “base spending level” for the company. That base level is defined as the average spending calculated over the two preceding years: (Y1 + Y2) / 2
Eligible expenses are identical to those that qualify for the federal SR&ED program. Expenses must be incurred after December 31, 2020, up to a maximum of $4M.
First time SR&ED claimants, for example startups, automatically benefit from the 20% tax credit. The maximum 20% rate also applies to claimants that have not submitted SR&ED claims in the preceding two years.
Conditions
Companies with a taxable capital of $50M or more are not eligible for this tax credit. Those between $10M and $50M will receive a lower percentage of the tax credit rate. That percentage is calculated based on the corporation’s prior year taxable capital: [$40M – (prior year taxable capital – $10M)] / $40M.
Examples :
Year
SR&ED Expenses
2019
$0
2020
$0
2021
$200,000
Company “StartupCo Inc.”
This company will benefit from a tax credit based on this calculation:
Current year eligible R&D expenses X 8%: = 200,000 X 8% = 16,000
Plus: current year eligible R&D expenses minus the average R&D spending calculated over the two previous years X 12%: = {200,000 – [(0 + 0) / 2]} X 12% = {200,000 – 0} X 12% = 24,000
Total credit to be received = 16,000 + 24,000 = $40,000 (20% of the 200,000 in expenses)
Year
SR&ED Expenses
2019
$50,000
2020
$100,000
2021
$200,000
GrowingCo Inc.
Current year eligible R&D expenses X 8%: = 200,000 X 8% = 16,000
Plus: current year eligible R&D expenses minus the average calculated over the two previous years X 12%: = {200,000 – [(50,000 + 100,000) / 2]} X 12% = {200,000 – 75,000} X 12% = 125,000 X 12% = 15,000
Total credit to be received = 16,000 + 15,000 = $31,000 (15.5% of 200,000 in expenses)
Year
SR&ED Expenses
2019
$200,000
2020
$150,000
2021
$100,000
MatureCo inc.
Current year eligible R&D expenses X 8%: = 100,000 X 8% = 8,000
Plus: current year eligible R&D expenses minus the average calculated over the two previous years X 12%: = {100,000 – [(200,000 + 150,000) /2]} X 12% = {100,000 – (350,000 / 2)} X 12% = 100,000 – 175,000 = (75,000)
Since the current year expenses are lower than the average of the two preceding, there will not be any additional grant tax credit.
Total credit to be received = 8,000 + 0 = $8,000 (8% of 100,000 in expenses)
• Can hours spent on project management, training and writing documentation be claimed as SR&ED expenses?
• Can you claim work performed by subcontractors? Under what conditions?
• Must you absolutely use timesheets to claim SR&ED?
• What tools can simplify your contemporaneous documentation?
• How to answer correctly to Canada Revenue Agency5 SR&ED eligibility questions?
• What is your role in the SR&ED claim process ? And why is it so important?
• What defines the start of a SR&ED project?
• What activities qualify for the SR&ED program?
• Can a technical resource be automatically claimed in SR&ED?
• Do you know what CRA auditors expect?
If you don’t have the answer to all of those questions, you may be losing your full potential for tax credits. Therefore register now for the next Emergex webinar on the technological aspects of the SR&ED program.
This event will be held on Tuesday, June 15, 2021, from noon to 3 pm (EDT) online. Login information will be sent to you a few days before the event.
Emergex even went as far as flying in their national SR&ED practice technology leader from Montreal to our offices in Hamilton to give a tailored SR&ED seminar to our entire technical team!
Colin Duetta, President and “Holder of the Napkin”, IOU Concepts, Hamilton, Ontario
