Common Questions on Government Grants and SR&ED Tax Credits
For over 30 years, RDP Associates Inc. (RDP) has assisted businesses in obtaining government grants and financial assistance. Our highly qualified and professional staff have extensive experience with preparing applications for SR&ED funding and other forms of government funding.
The expert SR&ED consultants on our team have answered some commonly asked questions on funding eligibility and how RDP can help you maximize your tax credits.
What is SR&ED funding?
The Scientific Research and Experimental Development Program (SR&ED) is a federal tax incentive program designed to stimulate innovation through R&D in Canada
How much money can I get back?
The tax credit amounts depend on your corporate ownership structure. Federal, refundable tax credits are available for Canadian-controlled private corporations (CCPCs) at a rate of 35%. Federal, non-refundable tax credits are available to foreign-owned, publicly traded sole proprietorships and partnerships at a rate of 15%. Additional, provincial tax credits are available in many provinces.
What kinds of expenditure can I claim?
Companies can apply for SR&ED investment tax credits for qualifying expenditures such as salaries and wages, materials used in trials or prototypes, overheads and contracts.
What type of work is eligible for SR&ED funding? I am not sure we do R&D!
SR&ED eligibility is not limited to pure research. If your company has to overcome technological challenges while developing or improving new products and processes (in a systematic way), you could be eligible for SR&ED funding. These challenges may arise out of limitations or constraints with current processes, systems, cycle time, integration or scalability, to name a few. If you cannot find a solution to these challenges in the public domain or are using your current, internal knowledge base, this is where your SR&ED could begin.
When do I have to file the claim?
SR&ED claims are due 18 months following your fiscal year end. For example, companies with a year end of December 31, 2017 must file their SR&ED claim by June 30, 2019. All required forms must be filed by this date in order to be considered for the credit and there are no exceptions. However, claims filed within 6 months of the fiscal year end are processed faster by CRA.
What if I already receive some sort of government grant or funding?
Many companies apply for and receive funding from other government sources. With careful planning, businesses can take advantage of several available programs to maximize the funding they receive. RDP’s team of government grants and R&D tax credit specialists can work with you to ensure that you maximize your overall returns.
How do I apply?
Applying involves submitting SR&ED specified forms as part of your tax return or amended return. The claim itself consists of two parts:
- A technical description detailing your SR&ED projects, and
- Related financial information for which you are claiming credits
GOVERNMENT GRANTS FAQS
What is a government grant? How is it different from a tax credit?
A grant is a contribution of funds to a business from a government body, and aimed at supporting the government’s target initiatives. These funds are provided as cash installments throughout the duration of a pre-approved project. They are generally non-repayable, but some may require repayment depending on the success of the project.
There are two main differences between grants and tax credits.
- A government grant is awarded to future initiatives or to get a new project off the ground. Grants will not fund projects already completed or underway, or reimburse expenses already paid.
- A grant is not an entitlement. Simply meeting eligibility requirements does not guarantee approval. Grant programs are restricted by application deadlines and fixed budgets, and may only approve a select number of applicants each year.
What grants are available?
Canada has hundreds of grant programs in operation to support a vast array of business initiatives. Based on government priorities, grant programs can be classified into five categories.
- Marketing and exporting
- Hiring and training
- Green energy
- Business expansion
Please see our grants page or speak to one of our specialists for more information on the types of activities that qualify for these programs.
How do I know if my company is eligible for government grants?
Every program has different eligibility criteria and regulations. Some programs are only available in certain geographic areas or at specific times of the year. Others are limited to companies of a certain size or industry. Grants are not to be seen as welfare for struggling businesses – your company’s financial health and stability are strongly considered. Two important considerations are:
- You should have been in operation for at least 2 years and must have at least 15 employees to be considered a suitable candidate for grants.
- You should also have plans for future growth or innovation, with an emphasis on new job creation and expansion into new markets.
RDP’s team of funding specialists can advise you on your eligibility. We can also look over your plans for the next 12 months to help you to align them with available grant programs.
How much money can I get from a grant?
Depending on the type of activity supported, incentives can range anywhere from $5,000 to $1,000,000. Grants will typically cover a percentage of eligible project costs (between 15% and 75%), up to a fixed maximum amount.
How much time and effort is required to apply for a government grant?
Each program has a unique application process. Here are some typical requirements to prepare for:
- A preliminary application or meeting with a government representative for screening purposes
- A full proposal containing detailed information on project plans and objectives, company background and capabilities, and financial status to be submitted to the program facilitator for evaluation.
- Company financial statements, insurance certificates, articles of incorporation, or other supporting documents may also be required with the application.
- This package must be submitted well in advance of the project start date. Applications can take anywhere from several days to several months to be processed by the government.
RDP recommends that you begin your search for funding at least 3 months in advance of your project kick-off. Our team of experienced grant specialists can assist you in navigating the channels of funding, compiling documentation, and preparing the necessary paperwork, to ensure that you get maximum return with minimum effort.
FAQs on RDP’s Government Grants and SR&ED Services
What services does RDP Provide?
RDP provides professional services to help companies manage, process and receive a full range of government grants available in Canada, USA, UK, Ireland and The Netherlands.
How do you charge for your services?
RDP charges a fixed fee, per diem, or on contingency basis. We are flexible on pricing and can provide a quote on any basis or as a combination.
What makes RDP different?
For over 25 years, RDP has been successfully helping clients with a full range of government funding programs including tax credits, tax recovery and grants. We have an outstanding record and thousands of satisfied clients.
What is your success rate?
RDP’s is proud to have an overall success rate above 90% in terms of dollars claimed for SR&ED funding, R&D tax credits and government grants.
Is confidentiality guaranteed?
We take client data security seriously and have procedures and training in place to prevent the loss of confidentiality. In over 25 years, RDP has never had an issue with the confidentiality of client information.