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Your Questions Answered

07/11/2013


The SR&ED program can provide financial incentives to health professionals who conduct health research that enhances the competitiveness and national strength of Canada. However, it is a very specialized tax program that has both science and accounting requirements. This FAQ provides general information about the SR&ED Tax Incentive Program for health professionals. For specific claim requirements, please contact a member of MNP’s SR&ED team for a more in-depth assessment.

1.   Am I Eligible for the SR&ED Program?

The SR&ED Program was established to encourage Canadian organizations of all sizes and in all sectors to conduct R&D. If you have incorporated your clinical practice as a professional corporation and conduct R&D on top of providing health care services, you may be eligible for a SR&ED tax incentive if your R&D meets the SR&ED eligibility requirements.

2.   What Research Activities are Eligible for a SR&ED Claim?

Health research encompasses a broad spectrum of activities that most clinician scientists can perform. There must be a clear objective –scientific or technological advancement– that the research is based upon to qualify for the SR&ED program. Therefore, not all research activities are eligible for a SR&ED claim. However, in general many clinician scientists have received thorough grounding in scientific method and your R&D is likely to meet the SR&ED tax eligibility requirements. If you are performing one or more of the research activities highlighted below (not an exhaustive list), your research may be eligible for a SR&ED claim.

  • Conducting clinical trials
  • Engaging in biomedical research
  • Applying research funding to Canadian Institutes of Health Research, Alberta Innovate Health Solutions, or other agencies
  • Publishing research articles in peer-reviewed scientific journals
  • Supervising technicians, graduate students, or postdoctoral fellows
  • Developing or improving medical devices or surgical tools
  • Developing and verifying a diagnostic procedure

 

3.   What are the Benefits of the SR&ED Program?

You may be eligible to receive benefits in the form of a refundable Investment Tax Credit (ITC), a reduction of taxes payable, or both. The federal and provincial tax credits you receive may be as high as 68.4% of salary-based eligible expenditures for tax year ending before 2012.  Due to federal budget changes, these credits decreased to 66.4% for 2013 and 64.3% for 2014 and future years.

4.   What Expenditures are Eligible for SR&ED Claim?

You may claim many of the expenditures incurred while performing SR&ED within your fiscal year. These expenditures may include, but are not limited to the list below:

  • Salaries
  • Materials
  • Equipment
  • Overhead

 

5.   What happens after I file the SR&ED claim?

First, CRA will screen the claim to determine if it can be processed as filed without further review. If the CRA processes your claim as filed, they will either reduce your taxes payable or issue a refund cheque to you. You will then receive a Notice of Assessment detailing the results of your claim from CRA.

In the event that the CRA cannot process your claim as filed, they may contact you to request more information or to discuss aspects of your claim in more detail. In cases where clarification or specific or detailed information is required, CRA may request an onsite review to go through the SR&ED projects and costs claimed. Once the review has been completed, CRA will issue a Findings Report with their assessment on the eligibility of the claim and then ultimately issue a Notice of Assessment.

6.   How long should I expect the Canada Revenue Agency (CRA) to process my claim?

For a refundable claim, it can usually be processed within 120 days after the CRA receives the filing package. The CRA has established service standards and goals for processing SR&ED claims. The following table illustrates their standards and goals.

Service Standards

Goals

Refundable claims

120 days

Claimant-requested adjustments to refundable claims

240 days

Non-refundable claims

365 days

Claimant-requested adjustments to non-refundable claims

365 days

The potential savings offered by the SR&ED program can have a very measurable impact on your bottom line. If you think you might be eligible, it’s well worth investigating. Contact a member of MNP’s SR&ED Team to find out if you are eligible for valuable ITCs for your R&D work.