It’s true that most farming and agriculture activities are routine and would not normally qualify for the SR&ED tax credit. However, there are cases where SR&ED may be hidden and the activities could be eligible.
When analyzing whether an agricultural activity may qualify for SR&ED tax credits, it’s imperative to remember what the program is about. It all comes down to overcoming technological obstacles and uncertainties. If new knowledge has been discovered along the way, whether or not the project was a success, then those activities have a chance at being approved for the benefits.
Before getting into specific activities to your industry, here’s an overview of the three criteria that activities must meet in order to qualify for SR&ED.
What Qualifies for SR&ED?
- Technological uncertainty – whether a given result of objective can be achieved, or how to achieve it, is unknown or cannot be determined based on generally available scientific or technological knowledge or experience.
- Technological content – there must be evidence that qualified personnel with relevant experience in science, technology, or engineering have conducted a systematic investigation through experiment or analysis.
- Technological advancement – gain in knowledge, the work must generate information that advances understanding of scientific relations or technologies.
Keep in mind the program is offered by the Canadian Government to assist companies engaged in innovation. While these criteria may seem tech and science heavy, if your company is working to enhance, modify, or improve existing products or processes, you may have work that meets the qualification.
A few activities that may be deemed eligible in Agriculture and Agro-foods include:
- New ways of improving yield
- New breeding processes
- Enhancements to storage solutions
- Custom equipment
- Pest control modifications
- Reducing pollution & waste
Check Out Your Check-offs: SR&ED
If a farm producer contributes to organizations that fund agriculture R&D purposes, they may be eligible for a SR&ED investment tax credits. The CRA defines agricultural check-off as, “contributions made to agricultural organizations that fund SR&ED”.
Possible check-off sectors that have qualified in the past include wheat, barley and canola. To make sure you don’t miss the deadline, be sure to keep up to date with the organization’s website or other publications as they will most likely have an announcement.
The best way to make sure you’re not missing any possible SR&ED eligible activities is to contact a SR&ED consultant that has submitted claims for agriculture companies in the past and can maximize your benefit.
*The information above is meant for informational purposes only, and not to be used as advice.
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