The manufacturing industry in Canada is known for its competitive nature. Unsympathetic economic conditions, currency fluctuations, and harsh international trade can dampen profit margins and create a challenging landscape for companies to navigate. To gain an edge, industry leaders are constantly looking for new ways to improve “time to market,” cut costs and provide better offerings to their customers.
Quality compliance and environmental impact are also another consideration for manufacturers – and continuous improvement programs to avoid the risk of product recalls and excess scrap. Desired results in these areas are typically achieved through systematic research and development which includes regular enhancements to products, processes, materials and systems.
What’s good for those in the industry to know is that a significant portion of these activities qualify for tax credits or cash refunds under the Scientific Research & Experimental Development (SR&ED) program. However, manufacturers have often been discouraged from participating, or simply under claimed a significant portion of their qualified work due to misconceptions about eligibility.
So, which expenditures are eligible? First, let’s take a look at the three key criteria the work has to meet.
The 3 Key Criteria for SR&ED Eligibility
- Technological uncertainty – whether a given result or 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.
While these three criteria may seem quite narrowed into tech and science, many successful claims include work done by programmers, project managers, technicians, skilled tradespeople, and process operators.
Below are some examples of work that could qualify for an SR&ED claim in manufacturing.
Symptoms of Eligible Work for Manufacturing Companies
- Designing and building tooling or equipment
- Changing / upgrading manufacturing processes
- Attempting to make process or products faster, more economical, or durable
- Attempting to reduce scrap rates
- Having engineers or technologists on staff
- Undertaking projects to improve the companies environmental impact
- Dealing in an industry that has frequent model changes
- Producing prototypes or samples
Why the Manufacturing Industry Turns to Business Improvement Group
With experience helping a diverse range of manufacturers across the nation, Business Improvement Group is positioned to service virtually any SR&ED eligible organization. Our clients can be assured they will be assigned consultants that have a deep understanding of their industry – including a diverse range of manufacturing companies.
Learn more about us here.
If you’d like to ask one of our experts about qualifications or getting assistance with filing a claim, request a free consultation here.
*The information above is meant for informational purposes only, and not to be used as advice.