SRED in the Cannabis Sector. On October 7, 2018, the Federal government legalized the usage of cannabis and permitted private sales of cannabis products. For an industry that has long been eclipsed by controversy, cannabis has been able to gain significant traction from companies across the spectrum like Microsoft, Coca-Cola, Walmart, and Amazon due to its health benefits. The cannabis sector is one of the few industries where there still seems to be several unknowns in terms of manufacturing and processing. Due to the immense amounts of technical work that still needs to be done in terms of research and investigation, SR&ED is a program that could greatly benefit operators in this domain. More about SR&ED Program – The 5 Questions to Ask. The main aspects to determine if the claimed work meets the definition of SR&ED as given in subsection of the Income Tax Act and to resolve any issues associated with eligibility, the CRA uses three eligibility criteria:
Has your SR&ED claim rejected due to lack of documentation? So, your SR&ED claim has just been rejected due to the following reasons: 1.
Lack of Documentation 2. Projects don’t qualify Your excuse for number 1, IT’S TOO TIME-CONSUMING TO DOCUMENT FOR SR&ED CLAIM. We’d rather focus on our deliverables, than track our time. Think of it this way – if you invest 10 minutes each week logging hours and jotting bullet point notes, you would be spending effectively about 8 man hrs (1 day) per year for tracking. What is SRED Tax Credit? What is SRED Tax Credit? SRED Review Process & Documentation. Tax Incentives Consultants. Tax Incentives Consultants. Tax Incentives Consultants. Tax Incentives Consultants. Tax Incentives Consultants.
Federal SR&ED Legislative Proposal Status. What is Bill C-97?
Bill C-97 was introduced by the Government on April 8, 2019. It states implementations of the provisions that were tabled in the Parliament on March 19, 2019. After receiving the second reading of April 30, 2019, it became law by royal assent on June 21, 2019. The data in the table below keeps track of the progress regarding the outstanding federal draft legislation that in turn amends the ITA (Income Tax Act). SR&ED Pre-Claim Consultation — Pros & Cons – EVAMAX Group. This service will tell you if there is SR&ED eligible work in any of your projects before you submit it to claim SR&ED. The idea behind this is to save you time and effort in putting together a claim and having to wait months thereafter before knowing if your claim is eligible or not.
Once a decision is reached by CRA, it could be several months before you finally receive any refunds from SR&ED. PCC gives you the opportunity to know in advance if your projects have SR&ED eligible activities. CRA will also give you advice on what type of documentation you will need to support your claim as well answer any questions. CRA will even provide you a written report outlining what activities would be eligible for SR&ED. The projects must be completed or in progress: This means that you cannot obtain a PCC for projects you are thinking of implementing (i.e. has not started). Research and Experimentation. Global Research and Development (R&D) Tax Credit.
SR&ED CASE STUDY: Technological Uncertainty. Introduction Technological uncertainty may arise from limitations of the current technology that prevents you from developing a new or improved capability.
Technological uncertainty exists when you don’t know whether you can achieve a certain result or objective or how to achieve it based on generally available scientific or technological knowledge or experience. We cannot determine eligibility without understanding the work performed and evaluating it using the five questions. In this example, there are indicators that suggest there is uncertainty but they do not point to any specific uncertainty. Example You use the current technology to extract oil from oilseeds, which involves batch processing. SR&ED Case Study: Technical problem versus technological uncertainty. Introduction There is a difference between a technical problem and technological uncertainty.
We cannot determine eligibility without understanding the work performed and evaluating it using the five questions. In this example, there are indicators that suggest there may be uncertainty but they do not point to any specific uncertainty. Example Scenario 1 – Technical problem You are a chemical company and you are developing a new process for a chemical product. You found that there were low levels of a corrosive liquid in the streams entering the pumps from time to time. SR&ED Case Study: Cost targets leading to technological uncertainty. Introduction Even though a cost target in itself does not necessarily create a technological uncertainty, a technological uncertainty might exist when the paths to meeting the cost target are technologically uncertain.
SRED case study: Development based existing scientific or... Introduction Development work is based on an existing scientific or technological knowledge base. Specifically, you might be directly adapting a known engineering or technological practice to a new situation when you are reasonably certain that the known technology or practice will achieve the desired objective. We cannot determine eligibility without understanding the work performed and evaluating it using the five questions. SRED: Creating new materials without technological advancement.
Introduction The creation of new materials, devices, products, or processes, or the improvement of existing ones, can be achieved without technological advancement. Work can be done systematically to produce a new product. However, without technological uncertainty and an attempt to achieve technological advancement, the work is not SR&ED. We cannot determine eligibility without understanding the work performed and evaluating it using the five questions. Example The basic design of the potato peeler has not changed for more than 100 years. You obtained several samples of phosphorescent powders from various suppliers. As a result of the work you performed, you determined, for each powder, the amount needed to produce the proper glow in the handle. You came up with a new and novel product, and the work you performed to choose the appropriate powder, based on performance and cost, was carried out very systematically. SRED: Creating new materials without technological advancement.
SRED case study: Commensurate with the needs and directly in support. SRED Case Studies. Provincial and Territorial Tax Credits for R&D. Preparing Your Company For SRED CRA Review. SR&ED Consulting: Is Your Company Maximizing Potential Benefits?