Evamax - SRED Consultants

Why You Need to Use A SRED Tax Consultant

February 5, 2011

Canada’s SRED Tax Program is one of the largest government based initiatives that supports businesses.  In 2010 it provided over $4m to encourage research and development within Canada.  It is believed to play a lead in fostering both a competitive and dynamic business environment for Canadian businesses.

The SRED Tax Program or to give it its full name – the Scientific Research and Experimental Development program – is a federal, tax incentive program to encourage businesses within Canada to undertake research and development to produce new and improved technological and scientific advances in processes, materials, processes and products.  The Canadian government intends to encourage the growth of new technology, innovations and products.  The SRED tax credit program is set up to assist companies of all sizes including start-up companies, small companies, partnerships and corporations.  Providing the company is based in Canada and the research in undertaken on an approved research subject, then generous tax incentives of 35% of expenditure and some overheads, exist. The tax incentive is also refundable if not enough tax has been paid.

Whilst the SRED tax credit program program is simple to explain there is a combination of long, detailed forms to fill out and a number of complex grey areas within the legal definitions of which research areas are allowable means.  In many cases it might be advisable to appoint SRED consultants to assist you with the process.

The SRED Tax Program has the benefit of being capable of being back dated for up to 3 years, so it could be that a good SRED tax consultant could find that work you are currently undertaking could be subject to a tax rebate.


How you manage and record your project activity is important in order to gain your maximum SRED tax benefits. This will include:

•    Detailed and careful tracking of all SRED activities and expenditures.
•    Breaking down each research and development activity into discrete projects.
•    Assigning all costs to accepted cost categories, cross allocated to a project.
•    Each project will require a separate financial report in the agreed format.
•    Tracking these costs and activities and reporting this financial information to the Canada Revenue Agency (CRA) in the correct format.


There are four separate completed forms required by the CRA and these are the:

•    Technical summaries.
•    Schedule 31.
•    Schedule 32.
•    Form T661.

All of these forms need completing at the end of the company’s financial year and submitted within 18 months of this date.

The complexity of the tax claim forms and the benefits of a business taking full advantage of the generous SRED Program makes the use of a SRED tax consultant both attractive and cost effective for many companies. If you are undertaking any kind of research or development work, even if it is in producing new products, it is advisable to discuss this with a SRED consultant.

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