Its also worth noting that SR&ED (specifically the ED part which is typically applicable to startups), only cares that you are seeking, systematically and in the face of technical uncertainty, for technical advancement within your organization.
They don't care whether the outcome of this search is successful or not.
This means you have the incentive to risk the funds on such an endeavour, as you can get the credit despite your success or failure.
Risk real money, and you'll get a refundable tax credit with a chq in the mail.
Risk "virtual" money (e.g. accrue a salary that you might only pay out later provided you have sufficient cash flow), and you get credits that can be carried and applied in years when you had/have real money.
One of the implications, is that if things end up going sideways, you still have the option to e.g. switch your startup to doing something else (like contract work), apply the old credits to the new money and recover something of your risk.
In principle anyone with eligible work can apply. Its even possible for unincorporated individuals to claim SR&ED on personal tax.
I would recommend though that you go to one of the public info sessions held in your area, since there are various angles to be aware of, that will help you optimize your claim. For example:
- a small Canadian corp typically gets a better rate than a claim on personal tax;
- if you're a "specified employee" (meaning you own 10% or more of the corp) they place certain caps on things like how much of the "proxy amount" you can apply in your claim
- a lot of the claim revolves around how much of your expenses was for eligible work. You typically have to be careful that a founder who is also doing marketing etc, is only claiming for the portion of time spent on the R&D part.
They go into all of this in the public info sessions, and they typically have specialists from various SR&ED areas available to answer pretty much any question.
You can also call them on various info lines, e.g. they offer a "first-time claimant" service where they try to make it easier for people looking at doing a first SR&ED claim, even coming out to visit your business if helpful.
They also offer a "preclaim project review" service where they'll give you a prelim opinion on the eligibility of a project, without you having to file a formal claim. (While this is not guarantee, it can for instance be used while raising funding, to demonstrate to prospective investors that you have a reasonable expectation of getting SR&ED support).
Great thanks. What deters me is R&D, if someone wants to make a Saas web application, say something like basecamp, to me there isn't really much research required other than what is already publicly available in books/tutorials.
How can someone receive a grant for something like that? (Or do you have to fudge the truth?)
They don't care whether the outcome of this search is successful or not.
This means you have the incentive to risk the funds on such an endeavour, as you can get the credit despite your success or failure.
Risk real money, and you'll get a refundable tax credit with a chq in the mail.
Risk "virtual" money (e.g. accrue a salary that you might only pay out later provided you have sufficient cash flow), and you get credits that can be carried and applied in years when you had/have real money.
One of the implications, is that if things end up going sideways, you still have the option to e.g. switch your startup to doing something else (like contract work), apply the old credits to the new money and recover something of your risk.