Are staff at your greenhouse conducting research, solving problems, and promoting development on site? Then you may be eligible for a tax incentive!
Read more about the SRED program and how you can participate.
Background:
This federal program allows corporations, individuals, trusts, and partnerships to benefit by engaging in scientific research and experimental development. You may be eligible to:
- Claim a deduction against income
- Earn an investment tax credit (ITC)
Many projects completed by greenhouse staff are eligible as long as specific requirements (WHY and HOW) are followed. Let’s break down the requirements further.
WHY: The project must be focused on researching a technological uncertainty. The project will generate new knowledge and is the reason WHY the work is done.
HOW: The project must be conducted as a systematic investigation, following these general steps:
- Define the problem
- Propose an explanation (hypothesis)
- Complete the experiment (test the hypothesis)
- Develop conclusions based on the results*
*Note: you don’t have to achieve your proposed explanation to be eligible for funding. An unexpected outcome is still considered new knowledge.
While language like basic, applied, and experimental research (and some support work), are used to describe eligible project types, the bottom line is that the project provides solutions to problems with no obvious solutions. Read through the definitions and examples for each project type here, to better understand how to define your projects.
Preparing the claim:
It’s recommended the SRED claim is submitted along with your yearly income tax return. All technical and financial aspects of the project are needed to support the claim.
Claims process:
- Describe the work including what, when, and who was involved
- Calculate associated expenditures (within the tax year)
- Allowable expenditures
- Salary or wages
- Materials
- Contractors
- Overhead and other expenditures
- Third party payments
- Allowable expenditures
- Claim a deduction and earn an investment tax credit (ITC)
While participating in SRED is rewarding, it is a time-consuming process that requires ongoing documentation and record keeping throughout the project, to prepare a claim. Many participants choose to use accounting firms to assist with the financial documentation of the claims process.
The SRED reporting deadline changes depending on your tax filling date, but is generally up to 12 months after a tax return is due.
Submissions to the SRED program will not disqualify you from applying to other funding programs, however, the amount of the ITC may be reduced.
More information:
For more information on the program visit the SRED program webpage for full details, find applicable forms and contacts for questions.