If you are in the Pulp & Paper industry, then this article will provide you with the key guidance on claiming your SR&ED tax credit. Before we go into the details, we must make sure who is covered and who is not covered.
Targeted Claimants for SR&ED Tax Credit
If you are from the logging, forestry or wood products sectors, then this guidance article will not be relevant to you. Your company will be eligible if you are a:
-Manufacturer of newsprint, fine paper, linerboard, coated paper, corrugated products, tissue as well as specialty papers;
-Printer, converter and company dealing with reclaiming and recycling waste products;
-Supplier and/or manufacturer of chemicals, instrumentation, machinery and other equipment, and supplies to the Pulp & Paper sector.
Definition of Eligible SR&ED Tax Credit Projects
Your SRED project is acceptable if it covers right from the onset of an idea to laboratory research, and all the way to complete trials. Though a typical SR&ED project in a Pulp & Paper shop floor is usually experimental development (ED), it normally includes the whole sequence of uninterrupted large- or full- scale, multi-stage processes. Project conducted in a Pulp & Paper shop floor can be a single or multiple mill trials. It is usually conducted by employing full production line equipment, or part thereof.
Mill trials can be further differentiated or classified as:
1. EP-ED mill trials: These trials are experimental development performed through experimental production;
2. CP-ED mill trials: These trials are experimental development performed through commercial production;
3. CP mill trials: These are not truly trials as there is only commercial production without experimental development.
It is possible and permissible to have a mixture of EP-ED mill trials and/or CP-ED mill trials in your SR&ED project. The rationale behind this boils down to the nature of the Pulp & Paper industry. This large sector utilizes and combines a wide range of processes in order to produce and manufacture a wide array of products. Different mills, processes and machines have their own unique characteristics. As such the results from each project will likely be unique and might not be applicable to another set of mill, process and machine.
Conclusion: Product variations in the same industry also includes consideration of size of processing equipment, production rate, as well as mill operation cost. Due to the continuing stages involved in a typical Pulp & Paper process, it is extremely difficult and virtually impossible to isolate one single section of the process. The reasons are the chain effect or the progressive influence of each section to the subsequent section. Hence, it is not feasible to conduct experimental development on a single or isolated section of the process.
Supporting evidences are significantly important when claim R&D Tax credit. We strongly suggest to check out Kelid’s interactive Self-Assessment Look Up to determine eligibility of your projects; estimate the amount of your tax credit; and save $1000′s in contingency fees when you register with us.