SR&ED, SRED, or Shred tax credit is the acronym for the Scientific Research & Experimental Development Tax Incentive Program in Canada headed via the CRA. Its purpose is to reward and incentivize companies that invest in innovative technology.
Who can Claim the Shred Tax Credit?
Various companies will have multiple ways to access this tax credit and different rates. Below are the top business categories that are eligible for this incentive, namely,
- Proprietorships (individuals) and trusts
- Private Corporations
- Other corporations
- Partnerships- An entity that is not tax-paying will never be eligible for a tax credit, which is also applicable to partnerships. The partnership claims can be performed at the component members component, be it corporations, trusts, and individuals.
Top 3 Types of SR &ED Consultants
Since tax issues are complicated, it is highly suggestive of working with a licensed sr&ed consultant Toronto. The three different types of consultants that you can consult with include,
- Specialists – SRED for the specialist is their daily bread and butter. These specialists have absolute, hands-on service, thus will take the entire procedure off your hands. The service in this form of the consulting firm generally includes the interview with the tech lead, write the technical facet of the claim, and make the financial calculations. The comprehensive audit support usually is part and parcel of the package. If the CRA wishes to question a part of this claim, these specialists are always ready to handle it.
- Simplified Service Specialists – Most businesses have acquired specific experience with SRED claims. A new service provider has emerged to assist companies requiring some technical support and a second opinion. The majority of these providers offer platforms on which clients need to put information. Most computations automatically generate.
- Accountants – An accountant is an all-rounder, and you must be familiar with the services they offer. Some accountants usually and can offer filing to the SRED tax as part of the offering, at times merged with other services and often for an extra fixed/% charge. The critical difference between a specialist and an accountant is that the accountant generally offers limited services.
Typically, they will make the financial calculations and review the claim’s technical side, which the team has put together. They, in most cases, will provide only limited audit support. Most of the phone and email communication with an inspector is taken care of by your employees.
The SRED tax credit is a good funding source for innovative companies towards the growth path. There are just too many nuances and too much money in the SRED support program interpretation rules to leave this to chance. So it is best to hire professionals to help you.
Firms that offer SRED tax credit services have a certified, experienced, and licensed team of accountants highly dedicated to the claims related to the SRED tax credits. They can help you develop a strong case and mainly benefit from the tax incentive program.