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March 2, 2024

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Overview of R & D Incentive Program

Encouraging Canadian R & D activity is a cornerstone of the Canadian government's economic policies. The government's success in providing a funding mechanism for innovation can be seen in the number of world-class technology companies that have grown from Canadian origins.

Even if it is not primarily a high-technology company, a business may still be eligible to claim scientific research and experimental development tax credits if it performs such activities. These tax credits are available to any company that carries on a research program in a scientific manner, where this research involves technological uncertainty and innovation.

Claiming a scientific research investment tax credit involves three phases:

  1. documenting the research activities on a project-by-project basis;
  2. costing the amounts spent on each project in accordance with generally accepted accounting principles, modified by certain rules in the Income Tax Act; and
  3. claiming tax credits by completing certain information on tax returns.

Because the investment tax credits are so lucrative (35% of expenditures for certain Canadian-controlled private companies, within limitations, and 20% otherwise), the potential recovery far outweighs the costs involved. Provincial tax credits may also be available.

We assist Canadian businesses in maximizing the tax benefits of their R & D activities by providing R & D tax consulting services and assisting with the claims process.