Introduced in the 1980s, SR&ED (Scientific Research and Experimental Development) is a federal tax incentive program, administered by the Canada Revenue Agency (CRA), to encourage businesses of all sizes, particularly small to medium and startup businesses, to develop new or improve existing products, processes, principles, methodologies, or materials. Eligible businesses can recover up to 68% of their expenditures including wages, materials, machinery, equipment, travel and training expenses, property taxes, utility expenses, and overhead. This presentation will walk you through the SRED program, eligibility critieria and how you can make a successful claim. For more information, visit: http://boastcapital.com.

1. Intro
to
SR&ED
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2. Agenda
• About
Boast
Capital
• What
is
SR&ED?
• Why
is
it
Important
to
You?
• Current
SR&ED
ITC
Rates
• Qualifying
Expenditures
• How
to
IdenJfy
SR&ED
-­‐
5
QuesJons
• Project
Examples
• How
to
Claim?
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3. About
Boast
Capital
• R&D
Cost
Recovery:
Calgary,
Vancouver,
Silicon
Valley
• Community
focused:
Startup
Calgary,
Canadian
Cloud
Council,
Calgary
Council
of
Advanced
Technology,
Calgary
Herald,
Techvibes,
Oil
&
Gas
Magazine
• Joint
iniJaJve
with
Plug
and
Play
in
Silicon
Valley
to
invest
in
Canadian
startups
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4. BoastCapital.com
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Recent
RecogniJon
Calgary
Herald’s
April
24,
2013
list
of
“Companies
SupporJng
Tech
Companies”

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About
Boast
Capital
• We
work
on
a
conJngency
basis
and
charge
a
percentage
of
the
tax
credits
(ITCs)
we
recover
for
you
– No
invoice
from
us
unJl
you
are
guaranteed
to
receive
the
tax
credits
from
the
government
– We
have
just
as
much
“skin
in
the
game”
• We
help
idenJfy
and
scope
eligible
work
and
expenditures

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What
is
SR&ED?
• ScienJfic
Research
and
Experimental
Development
tax
credits.
• Federal
Tax
IncenJve
program
for
InnovaJon
administered
by
the
Canada
Revenue
Agency
(CRA)
–
Cost
Recovery
• Intended
to
encourage
businesses
of
all
sizes
to
conduct
applied
research
and
development
(R&D)
that
will
lead
to
new,
improved,
or
technologically
advanced
products,
processes,
principles,
methodologies,
or
materials.

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Why
is
it
Important
to
You?
• Startup:
criJcal
way
to
extend
your
runway
and
maximize
money
already
invested
into
your
company
• Growth:
provide
financial
support
to
help
fuel
growth
• Established:
allow
for
a
beier
return
by
increasing
cash
reserves
or
reinvest
in
R&D
of
new
product
that
will
keep
you
on
the
cujng
edge

8. SR&ED
Stats
• $3.6B
in
funding
paid
annually
– $1.8B
paid
in
2006,
100%
increase
• 28K+
claimants
annually
naJonwide
– 11K
claimants
in
2006,
155%
increase
• 80%
of
claims
by
small
and
medium
size
businesses
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9. BoastCapital.com
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Refundable
Credits
• Fall
within
the
Small
Business
Limit
• Canadian
Controlled
Private
CorporaJon
(CCPC)
• ~66%
back
on
labor
• ~41%
on
sub-­‐contractors
• ~41%
on
materials
consumed/transformed
and
capital
expenditures
(2013
last
year)
Non-­‐Refundable
Credits
• Fall
outside
of
the
Small
Business
Limit
• Non-­‐CCPC
• Publically
Traded
• ~44%
back
on
salaried
labor
• ~22%
on
sub-­‐contractors
• ~28%
on
materials
consumed/transformed
and
capital
expenditures
(2013
last
year)
Current
SR&ED
ITC
Rates
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10. SR&ED
Program
Changes
• Eliminate
capital
expenditures
– For
expenditures
incurred
aser
Jan
1,
2014
• Lower
the
overhead
proxy
amount
– Currently
60%
à
55%
by
Jan
1,
2014
• Lower
%
of
subcontractor
payments
– Currently
100%
à
80%
by
Jan
1,
2013
• Lower
federal
SR&ED
rate
for
large
corporaJons
– Currently
20%
à
15%
by
Jan
1,
2014
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11. BoastCapital.com
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Qualifying
Expenditures
• Salaries
• Cost
of
materials
consumed
or
transformed
• Contract
payments
–
subcontractor
expenses
• Lease
costs

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Qualifying
Expenditures
• Capital
expenditures
–
machinery,
computer
hardware,
etc.
(ends
aser
2013)
• Overhead
expenditures
–
tradiJonal
or
proxy
method
*work
must
be
carried
out
in
Canada
(10%
allowed
outside
of
Canada/performed
by
Canadian
tax
payers)

13. SR&ED
Technical
Overview
• ScienJfic
Research
(SR)
– Usually
carried
out
in
UniversiJes/Laboratories
• Experimental
Development
(ED)
– The
majority
of
the
claims
– CRA:
“Work
performed
for
the
purpose
of
creaJng
new,
or
improving
exisJng,
materials,
devices,
products,
or
processes”
– Can
occur
in
various
industries
(low
and
high
tech)
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14. Eligibility
Criteria
• Technological
Advancement
The
technology
being
sought
does
not
exist
within
the
company
or
public
domain
• Technological
UncertainJes/Obstacles
A
qualified
person
could
not
predict
if,
or
how,
a
project
could
succeed
on
the
basis
of
previous
knowledge
(i.e.
exisJng
proven
methods)
• Technical
Content
Qualified
personnel
working
in
a
systemaJc
manner
with
documentaJon
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15. How
to
IdenJfy
SR&ED
-­‐
5
QuesJons
1. Have
you
changed
a
process
to
reduce
costs
or
to
improve
manufacturing
capabiliJes?
2. Have
you
created
a
new
product,
made
improvements
or
added
new
features
to
an
exisJng
product.
Have
you
built
a
prototype
or
proof
of
concept
for
a
product
idea?
3. Have
you
designed
or
developed
new
sosware
or
systems
or
modified
an
exisJng
technology?
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How
to
IdenJfy
SR&ED
-­‐
5
QuesJons
4. Have
you
incurred
costs
related
to
a
process,
project
or
prototype
that
is
incomplete
because
of
unresolved
technical
problems?
5. Are
you
involved
in
engineering,
design,
data
collecJon,
tesJng
or
other
developmental
work?

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Project
Examples
• IntegraJng
disparate
sosware
systems
that
weren’t
meant
to
communicate
with
each
other
• Developing
a
reusable
sosware
plaworm
using
a
non
standard
MVC
• Working
to
increase
manufacturing
speed
while
keeping
quality
consistent
• Retrofijng
an
exisJng
piece
of
equipment
to
use
for
a
different
funcJon
than
its
originally
intended
funcJon

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Project
Examples
• Developing
a
sosware
system
that
needs
to
be
backward
compaJble
with
an
old
legacy
system
(context
of
your
company)
• Overcoming
hardware
limitaJons
in
order
to
achieve
an
aggressive
performance
target
or
light
footprint
• Applying
technologies
in
ways
they
weren’t
intended/designed
to
be
applied

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Tracking
SR&ED
Work
• Contemporaneous:
generated
at
the
Jme
the
SR&ED
work
is
done
• Dated:
to
prove
that
the
work
occurred
in
the
fiscal
year
• Highlight
technological
issues/challenges:
support
the
technical
reports
that
will
be
submiied
with
the
claim

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DocumentaJon
-­‐
Sosware
• Timesheets
• Document
Technical
challenges
-­‐
maintain
records
on
technical
challenges
faced
during
development
• Version
control
for
all
technical
documents
• Sosware
prototypes
• Test
Documents
• Developer
notebooks
• Emails

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DocumentaJon
-­‐
Other
• Timesheets
• Technical
challenges
• Use
version
control
for
all
technical
documents
• Product
prototypes
• Scrap
material
• Test
Documents
• Engineer
notebooks
• MeeJng
minutes

22. How
to
Claim
SR&ED
• File
a
separate
schedule
and
report
with
your
corporate
tax
return
– This
includes
technical
and
financial
components
• SR&ED
is
a
ITC
(Investment
Tax
Credit)
• Can
claim
up
to
18
months
past
year
end
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Claim
Turnaround
Time
From
receipt
of
a
complete
claim:
• Refundable
claim
–
120
days
• Non-­‐Refundable
–
365
days
• Amended
claim
-­‐
240
calendar
days

24. Contact
InformaJon
Jeff
ChrisJe
Calgary,
AB
403-­‐589-­‐2809
jchrisJe@boastcapital.com
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James
Suk
Vancouver,
BC
604-­‐779-­‐7770
jsuk@boastcapital.com
FREE
SR&ED
ASSESSMENT
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