You can get Tax Credits for your Medical R&D

The Scientific Research and Experimental Development (SR&ED) program is a federal tax incentive program administered by the Canada Revenue Agency (CRA). It offers tax and cash incentives to Canadian companies for scientific and technological development. 

The programme offers generous tax credits of around 60% of eligible payroll expenses, and 40% of sub-contractor expenses. 

The CRA recognizes that SR&ED expenditures in medical research generally meet the criteria of the program as it resolves technological uncertainties in the medical field and leads to the advancement of medical knowledge. 

It is often unclear who can claim Medical SR&ED Tax Credits

It is often difficult to determine who can claim the tax credit for medical research. Usually there are many legal entities involved, doing research in a collaborative effort. For example physicians who work in a medical institution, Medical Professional Corporations (MPC) that employ physicians, and Health Care Entities (HCE) like hospitals, universities or research institutes. 

When these three types of organizations work together on a research project, then it has to be very clearly defined who owns the Intellectual Property IP resulting from the research. CRA has a very hard time dealing with collaborative efforts, and wants to get a clear picture on the individual contributions. 

The recent SR&ED guideline is mostly concerned with the eligibility of these collaborative claims. CRA is auditing tax credit submissions by individual medical professionals and will even go to the extent of scrutinizing employment contracts to make sure a claim is eligible for a tax credit. 

How to Claim SR&ED for Medical Research

Health Care Entities can not benefit from the SRED programme directly. A publicly funded HCE is not a taxable entity, and therefore cannot benefit from the tax credits.

The Income Tax Act states that the SR&ED work must either be done directly by the taxpayer (called the “payer”) or on behalf of another party (called the “performer”), and that the work must result in direct expenses. 

Therefore the SR&ED tax credits need to be claimed by the Medical Professional Corporation for expenses that were made specifically for the research. For the CRA to accept the claim, a contractual agreement needs to be in place for the specific purpose of the research. 

It is important to keep track of the actual work done by a physician. For example, if a physician is required to perform academic responsibilities other than R&D (i.e. lecturing), then that needs to be tracked and can not be included in the claim.

Because of the diverse working relationships between physicians and hospitals / universities, there is a lot more to be considered when deciding on the best way to submit a SR&ED claim.

Documentation required for your Tax Credit Claim

The CRA wants to see all agreements in writing. We generally advise our clients to comply, and help them to compile all agreements in a manner which is acceptable by the CRA. 

Sometimes we have situations where no written agreement exists. In that case other evidence should clearly demonstrate which party is legally bound to provide the medical services and to perform the research. This includes the documentation about the research itself, but also the contracts showing the relationship between entities, and who is making the contract payments for which portions of the research.

Documentation required for your Tax Credit Claim

It’s a good idea to get professional advice from a SR&ED consultant when you conduct research. There is a good chance that the CRA will fund some of the cost of your medical Research. 

The CRA SR&ED Guidelines provide brief suggestions on which types of medical research can be eligible to claim tax credits, and who can submit a claim. However, in reality, the programme is very complex and submitting SR&ED claims is a time consuming process.

We can assist you in setting up your medical research project in such a way that you have the best chance for getting government assistance. Contact us now, before you even start your project, and maximize your SR&ED tax credits. 

About Conceptinero

We are a full-service professional SR&ED Consulting Firm specialized in the Medical Science, Software and Manufacturing industries. We have a 95% success rate in getting CRA to refund up to 65% of your research and development costs.

We engage with you to assess the technical and financial viability and make sure your claim gets approved by CRA without an audit. We have submitted $50M in claims to the CRA. Over 320 claims were accepted as filed, for an average $146,000 per company.

Unlike larger SR&ED consulting firms, we offer full service from an individual consultant who gets to know your team and fully manages your CRA claim. We don’t expect you to do the heavy lifting, which means maximum results with minimal input from your team so you can focus on your business.

Facebook Twitter Linkedin Whatsapp Envelope

Leave a Reply

Blog21main 1920w 1

5 tips to successfully apply for SR&ED Canada Tax Credit

get a free strategy session 5 tips to successfully apply for SR&ED Canada Tax Credit “You are young and life is long and there is time to kill today. And then one day you find ten years have got behind you. No one told you when to run, you missed

Blog29main 1920w

How to Fund your R&D with SR&ED Financing

get a free strategy session How to Fund your R&D with SR&ED Financing If your company is located in Canada and has research and development (R&D) aims, then you’ll be pleased to know that the government of Canada provides very generous support for research and innovation. The Scientific Research and

TrackingDocumentationbanner 1920w

How to track Financial Documentation for SR&ED

get a free strategy session How to track Financial Documentation for SR&ED The Scientific Research and Experimental Development (SR&ED) Program is a federal tax incentive program that encourages Canadian business to reach technological advancement by conducting systematic investigation when they are faced with technological uncertainty. The Canada Revenue Agency (CRA)

Conceptineroblog31banner 1920w

Overhead Cost in SR&ED: traditional method and proxy method

get a free strategy session Overhead Cost in SR&ED: traditional method and proxy method If your company is located in Canada and is trying to improve a product or process, then it may benefit from government funding. The federal government offers tax credits for your research cost through the Scientific

HappyCustomermain 1920w

Software Development Sub-contractors: Who can make a SR&ED claim?

get a free strategy session Software Development Sub-contractors: Who can make a SR&ED claim? The development of new software products often requires hiring contractors to leverage skill sets not always available within a company. Software development companies have a choice to perform the research in-house, sub-contract out the Scientific Research

timetrackingblogmain 1920w

Software Development and SR&ED Time Tracking

get a free strategy session Software Development and SR&ED Time Tracking Companies can claim up to 68% of R&D costs from the Canada Revenue Agency to support your software research and development projects. However, without proper records, it will be difficult to receive a refund from the CRA. This exceptional SR&ED

Load More Blogs
No More Blogs
Conceptinero Inc logo with caption Funding Innovation
Follow Us
Facebook Twitter Linkedin Instagram
Call Us And Get Paid By CRA
© 2023  All Rights Reserved