Monday, December 10, 2007

R&D Tax Credits in Canada

Canada is one of the best countries to provide SRED (Scientific Research & Experimental Development) tax credits for businesses.  A Canadian owned company can get up to 70% of the money spent on SRED.  By providing tax credits, Canadian government encourages more experimentation and research.  This program is especially helpful for small businesses with limited funds.  Even if a new experiment or development fails, the business essentially gets that money back just for trying, thus reducing the risk inherent in trying new things.

At Heaven Fresh, we have done quite a bit of experimentation on process improvement and product development.  Some of these experiments worked, but others did not as we ended up abandoning them for various reasons. However, it  is the result of trying the new tools, technologies and processes with which we are able to manage all of our offices with very minimal resources.

Our efforts to improve processes and products were really an attempt to run an efficient and profitable business as we were not even aware of the SRED credits in Canada. We came to know about it through Brian Hartman of RDFM (http://www.rdfm.ca) whom I met in a business network meeting.  RDFM helped us put a SRED claim together for a percentage of the claim as the fee for their services. The fee was only charged once the claim was approved and it was definitely worthwhile as it required expertise to determine what can or cannot be claimed and to put the actual claim together according to the Canada Revenue Agency's guidelines.

We received a check from CRA last week for our approved claim. This is a tremendous help for a small business like Heaven Fresh. As a result, we are also planning to step-up our research and development activities.  During the SRED claim process, we also learned another government program  called IRAP (Industrial Research Assistance Program) where the government provides financial and business assistance for research and development.  We have scheduled a meeting  with the IRAP adviser on December 17, 07 and I will post more on IRAP once I get further information.

If you are a Canadian business, I would strongly encourage you to get in touch with Brian Hartman at RDFM and you might be surprised to find out that many of your "routine " activities qualify for the SRED credits.

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