When I first started in my position as R&D Tax Manager I was often surprised at the number of companies who did not know they qualified for Scientific Research and Experimental Development Tax Credits (SR&ED). Now, I have come of the opinion that there are three reasons for this: lack of knowledge, lack of information and fear.
Lack of Knowledge
The first, lack of knowledge, results from the fact business owners/managers are often too occupied running the business to spend time gathering additional information that may or may not apply to them. To compensate for this lack of time, companies often look to their service providers for assistance.
The problem with this is that an accountant will not know if a company is performing SR&ED unless they have detailed knowledge of the companies operations. For example, unless the owner/manager has informed the accountant that the company has been making adjustments to its manufacturing line in an effort to increase efficiency, the accountant will not know.
Lack of Information
The second, lack of information, is a result of the poor marketing strategies and material produced by the government in the past. I give the CRA credit for their recent news releases and ad campaigns aimed at increasing public knowledge of the SR&ED program as well as some of their new manuals that are somewhat easier to read and understand.
Unfortunately, the majority of the material available is too technical for most people, and it’s not the easiest to find if you don’t know where to look. If you are interested, a good place to start is the SR&ED portion of the CRA website.
Fear
Now we come to the third reason, fear. Anybody who has dealt with SR&ED claims for any length of time will tell you that there is a high probability that you will get audited on the initial claim and after this you can look forward to an audit about every 5 years or so, depending on how well the first audit went.
This creates a lot of fear as most owners don’t want the government coming in and looking through their books in detail. The truth about these audits is that if you have qualifying SR&ED there is nothing to fear; the auditor will come to your business or simply discuss issues over the phone to determine if you are, in fact, doing what you say you are doing.
Once they have determined that you are performing qualified SR&ED they will most likely pass your file onto a financial reviewer who may give you a call if they are curious about calculations or expenses claimed in the SR&ED portion of your return. At the end, if you have filed appropriately you will have no adjustments to your claim and will realize that there was nothing to fear at all.

I said at the beginning that SR&ED is not just for IT companies anymore. The following is a list of the types of companies who have had successful SR&ED claims in the past:
- Wine manufacturer
- Bathtub manufacturer
- Brewery
- Commercial fan manufacturer
- Sand and gravel companies
- Environmental solutions
- Trailer manufacturer
- Tortilla chip producer
- Race seat designer
- Plastic food container manufacturer
I hope now you will go do a little research or contact us to see if you qualify for this lucrative tax credit.
- Josh Smith, CA
SR&ED Manager
Welch LLP