If you have a design, engineering, or manufacturing business in electronics or electrical industry and are actively engaged in research and development of your products and services, you may qualify for R&D tax incentives. This is a Federal program and is known as the Scientific Research and Experimental Development(SR&ED) program. This program is meant to encourage all businesses in Canada in all sectors to conduct research and development which would help develop new or improved products or processes in their fields.
Though the R&D tax incentives are meant for all businesses, you have to qualify by meeting the program’s criteria to be entitled for the tax incentives. In order to meet the criteria for the R&D tax incentives your projects should be either in basic or applied research; or experimental development.
Examples of eligible R&D tax incentives in the electrical and electronic industries could be:
in design, development, manufacturing or installation of:
- Printed Circuit Boards (PCB) such as Lithography process
- Surface Mount Technology(SMT)
- Soldering or desoldering techniques
- Micro-electronic systems and circuits (MEMS)
- Computer systems and networks
- Industrial process control systems
- Instrumentation and automation
- Telecommunication, broadcast, recording and audiovisual systems
- High voltage rectifiers, transformers, amplifiers and switch gears
- Power converters, rectifiers and conditioning devices
- Power and energy distribution
- Dry and liquid filled transformers and insulation products
- Power semiconductors
- AC/DC drives and motors
- Smart grids.
Over the years it has been noticed that many companies in electrical and electronic industries do not believe that they are eligible to qualify for the R&D tax incentives since they are paying payments in lue of taxes. You can apply for SR&ED for expenditures such as wages, materials, subcontractors as well as for some overheads. If your company is a Canadian controlled private corporation (CCPC), it can get a tax credit of 35% up to the first $3 million of expenditure and 20% on the excess if the expenditure is carried out in Canada. Other companies can earn a tax credit of 20% of the expenditure if the SR&ED was carried out in Canada.
The Canada revenue agency(CRA) has Research and Technology advisers (RTA) assigned to different geographical locations. It has been suggested by the agency that you invite your RTA adviser to meet with you and discuss your business and project ideas ahead of time and advise you for supporting documenting and evidences. There are also many accounting firms and consultants who can help you file your claims. These claims are normally submitted with your company’s or individual tax return. You can file the SR&ED claim within 12 months of your income tax return’s filling due date for the year in which you spent the money on the research and development.
Kelid™ has years of experience helping electronic and electrical industries dig up eligible SR&ED projects. It costs you nothing to contact us for eligibility of your projects or associated expenses. We strongly recommend you to check out our online assessment and calculator tools to estimate your R&D tax incentive.