What are the different sorts of SRED that exist?

Shop-floor SRED is a very common type of SRED in manufacturing environments.  Shop-floor SRED means that the experimental work is carried out in the regular production facilities themselves, rather than in an experimental facilities.  One of the advantages of shop-floor SRED is that it can be quick and cheap to set up experiments vs investing in a test environment that may require substantial investment to replicate the machinery and systems under test from the production environment. 

SRED can occur in agricultural settings.  Here experiments can center around crop production where one variable is changed on each of several plots of land under cultivation, then the crop yields are compared vs control plots which are grown using known methodologies.

SRED can be claimed for software development.  This is the most widely claimed vertical for SRED for the past several years.  For software to be claimed as SRED work, there must be evidence of experimental development going on.  It is not sufficient to claimcomputer programming activities or computer architecture or routine IT functions.

There are often three methodologies used to differentiate claimable software activities from routine non-SRED software work.  The first area to examine for SRED software work is scalability.  Scalability issues occur in many facets of software development. Scalability issues often result in SRED because resolving scalability concerns usually involves testing and experimental work.  Some aspects of scalability involve moving mainframe apps into pcs or even mobile phone environments. Moving standalone applications into the cloud involve different aspects of scaling.Response time, hardware constraints, memory disk or power restrictions can all lead to scalability issues that require experimentation to assess and resolve satisfactorily.

Another way to uncover SRED activities in software development is to perform the Software Conference test.  If one of the tech leads on your development team could go to a Software conference and deliver a 30 minute talk on lessons learned, things to avoid, technical takeaways from your software project then chances are you were engaged in SRED work.

The last hallmark of software SRED work is tools development.  Tools are a specific class of software that help you build other software. Because tools are used repeatedly, there is often an incentive to experiment and ensure that the tools are well written for the task at hand.  An example of tools development might be an Android software coder who decides that he wants to convert his 300 deep Android application library so that it can work on iPhones.  The developer can certainly use brute force techniques to manually convert his apps over from Android-only use such that they will function in the iphome environment.  He might be well served, however, to spend some resources upfront, and carry out some experimentation to determine how he might be able to automate some or all the steps required to modify his 300APPS SO THAT THEY WIILL BE SUITABLE FOR USEON IpHONES.  This experimental work that he carries out is called tools development and it represents SRED-eligible activities.

SR&ED is different in 2021

What has changed in SRED in 2021?  Lots!

The CEWS Program is a huge change which will affect SRED claims in 2020, 2021 and 2022.  CEWS grinds down the salary component of SRED by 65%.  Despite being headcount and salary based, proxy is not affected by CEWS grind.  Neither are materials or subcontracts.  Companies who can’t decide if they should accept both CEWS and SRED subsidies need to know that they should always claim all subsidies possible.  In the case of CEWS, they will receive 100 cents on the dollar of the CEWS benefits they receive.  SRED expenditures, not credits, are ground down by overlapping CEWS subsidies.  At worst, CEWS will grind down 65% of a SRED claim.  Proxy, materials and overhead are never impacted.

What else is new in SRED?  Alberta has cancelled its provincial SRED program for company year ends after January 1, 2020.  Because most companies have a December 31 YE, the impact of the Alberta SRED cancellation will be felt by most companies in the first half of 2021 as they prepare to file their 2020 T2 + SRED.  It may be worth it for companies without large fixed infrastructure in place to consider moving out of Alberta to a SRED-friendly province.  Manitoba, which has 15% credits for both ccpc’s and large corporations may be worth a look.  BC, right next door, has 10% refundable credits for both ccpcs and large corporations.  The provincial credits are a significant portion of a company’s overall SRED funding.  In Manitoba for instance, the provincial SRED funding represents 30% of total SRED funding for a CCPC while for a large corporation it is even more significant, clocking in at 50% of the total SRED funds received!

It’s strange how in the US it is commonplace for companies to be domiciled in Deleware for some fairly obscure advantages regarding business law planning in a corporate friendly jurisdiction.  Contrast the US corporate mobility with Canada’s lack of mobility.  Who has heard of a corporation moving provinces to reap millions of dollars of benefits in additional SRED funding?! I’m not aware of any companies doing it!

What else has changed in SRED in 2021?  The federal government put in place a positive change for CCPCs about a year and a half ago to stop means testing companies’ receipt of the 35% refundable ITC.  Prior to this change, when a company’s prior year net income exceeded $800K, the current year SRED claim for the CCPC attracted only 15% non-refundable ITCs and the OITC was ground down to zero.  After the positive SRED change, the ccpc’s OITC will still be reduced to zero when prior year net income exceeds $800K.  BUT, their 35% refundable ITC federal credits will not be impacted negatively in any way.  This is a large positive change for the SRED programs which helps CCPC’s nationwide.

The final change we will talk about goes back 3 years.  The new widespread use of the FTCAS program has widespread implications for SRED planning.  Now, companies that are not first time claimants of SRED will have much less chance of having their claims reviewed in a given year by the CRA.  This is because the CRA has decided to focus so much of its’ audit resources on first time claimants, both via regular audits and through the increased use of the First Time Claimant Advisory Service (FTCAS).

Introduce Yourself (Example Post)

This is an example post, originally published as part of Blogging University. Enroll in one of our ten programs, and start your blog right.

You’re going to publish a post today. Don’t worry about how your blog looks. Don’t worry if you haven’t given it a name yet, or you’re feeling overwhelmed. Just click the “New Post” button, and tell us why you’re here.

Why do this?

  • Because it gives new readers context. What are you about? Why should they read your blog?
  • Because it will help you focus your own ideas about your blog and what you’d like to do with it.

The post can be short or long, a personal intro to your life or a bloggy mission statement, a manifesto for the future or a simple outline of your the types of things you hope to publish.

To help you get started, here are a few questions:

  • Why are you blogging publicly, rather than keeping a personal journal?
  • What topics do you think you’ll write about?
  • Who would you love to connect with via your blog?
  • If you blog successfully throughout the next year, what would you hope to have accomplished?

You’re not locked into any of this; one of the wonderful things about blogs is how they constantly evolve as we learn, grow, and interact with one another — but it’s good to know where and why you started, and articulating your goals may just give you a few other post ideas.

Can’t think how to get started? Just write the first thing that pops into your head. Anne Lamott, author of a book on writing we love, says that you need to give yourself permission to write a “crappy first draft”. Anne makes a great point — just start writing, and worry about editing it later.

When you’re ready to publish, give your post three to five tags that describe your blog’s focus — writing, photography, fiction, parenting, food, cars, movies, sports, whatever. These tags will help others who care about your topics find you in the Reader. Make sure one of the tags is “zerotohero,” so other new bloggers can find you, too.

Introduce Yourself (Example Post)

This is an example post, originally published as part of Blogging University. Enroll in one of our ten programs, and start your blog right.

You’re going to publish a post today. Don’t worry about how your blog looks. Don’t worry if you haven’t given it a name yet, or you’re feeling overwhelmed. Just click the “New Post” button, and tell us why you’re here.

Why do this?

  • Because it gives new readers context. What are you about? Why should they read your blog?
  • Because it will help you focus your own ideas about your blog and what you’d like to do with it.

The post can be short or long, a personal intro to your life or a bloggy mission statement, a manifesto for the future or a simple outline of your the types of things you hope to publish.

To help you get started, here are a few questions:

  • Why are you blogging publicly, rather than keeping a personal journal?
  • What topics do you think you’ll write about?
  • Who would you love to connect with via your blog?
  • If you blog successfully throughout the next year, what would you hope to have accomplished?

You’re not locked into any of this; one of the wonderful things about blogs is how they constantly evolve as we learn, grow, and interact with one another — but it’s good to know where and why you started, and articulating your goals may just give you a few other post ideas.

Can’t think how to get started? Just write the first thing that pops into your head. Anne Lamott, author of a book on writing we love, says that you need to give yourself permission to write a “crappy first draft”. Anne makes a great point — just start writing, and worry about editing it later.

When you’re ready to publish, give your post three to five tags that describe your blog’s focus — writing, photography, fiction, parenting, food, cars, movies, sports, whatever. These tags will help others who care about your topics find you in the Reader. Make sure one of the tags is “zerotohero,” so other new bloggers can find you, too.

Introduce Yourself (Example Post)

This is an example post, originally published as part of Blogging University. Enroll in one of our ten programs, and start your blog right.

You’re going to publish a post today. Don’t worry about how your blog looks. Don’t worry if you haven’t given it a name yet, or you’re feeling overwhelmed. Just click the “New Post” button, and tell us why you’re here.

Why do this?

  • Because it gives new readers context. What are you about? Why should they read your blog?
  • Because it will help you focus your own ideas about your blog and what you’d like to do with it.

The post can be short or long, a personal intro to your life or a bloggy mission statement, a manifesto for the future or a simple outline of your the types of things you hope to publish.

To help you get started, here are a few questions:

  • Why are you blogging publicly, rather than keeping a personal journal?
  • What topics do you think you’ll write about?
  • Who would you love to connect with via your blog?
  • If you blog successfully throughout the next year, what would you hope to have accomplished?

You’re not locked into any of this; one of the wonderful things about blogs is how they constantly evolve as we learn, grow, and interact with one another — but it’s good to know where and why you started, and articulating your goals may just give you a few other post ideas.

Can’t think how to get started? Just write the first thing that pops into your head. Anne Lamott, author of a book on writing we love, says that you need to give yourself permission to write a “crappy first draft”. Anne makes a great point — just start writing, and worry about editing it later.

When you’re ready to publish, give your post three to five tags that describe your blog’s focus — writing, photography, fiction, parenting, food, cars, movies, sports, whatever. These tags will help others who care about your topics find you in the Reader. Make sure one of the tags is “zerotohero,” so other new bloggers can find you, too.