SR&ED Eligibility Guidelines For Small Businesses: What You Need To Know

SR&ED Eligibility Guidelines For Small Businesses: What You Need To Know

We had the pleasure of speaking with Dharmesh Gandhi, Partner, SR&ED and Business Tax Incentives, EY Canada, who discussed his team’s ability to address the credits, grants, and incentives available to Canadian clients, shared his insightful opinions on how small businesses can ensure that their work complies with the new SR&ED eligibility guidelines by demonstrating that it was done to address a technological uncertainty and the most efficient methods for supporting creative developers.

Innovation is only as strong as our collective ability to support it. An EY Canada Partner who leads our private business incentives practice nationally, Dharmesh’s team works hand-in-hand with Canadian clients to understand the credits, grants, and incentives available to them, and translate those opportunities into leading-edge developments.

Since joining EY’s dedicated SRED practice in 2011, Dharmesh has led business tax incentive credit engagements from coast to coast. His team empowers clients to identify and tap into legislative and discretionary sources of government funding to fuel their innovation programs. This group’s comprehensive approach enables practitioners to provide integrated support across a broad spectrum of areas, from compliance and assurance to tax advisory services. Dharmesh brings expansive skills to that mix, including negotiation, business planning, risk management, and more.

When did you join EY?

Since joining EY’s dedicated SR&ED and Business Tax Incentives practice in 2011, I have led business tax incentive credit engagements from coast to coast.  My team is focused on working with and empowering clients to identify and tap into legislative and discretionary sources of government funding to fuel their businesses. I take great pride in the fact that we work with companies of all sizes; from pre-revenue start-ups to some of the largest multinationals in the world and everything in between.  SMEs often believe that EY doesn’t work with companies of their size, or that we would be too expensive for them.  In reality, because of the size and experience of our team, we are able to work at scale, so we offer competitive pricing to SMEs when compared to boutiques while having the quality of a Big 4.  It’s our belief that everyone should have access to their fair share of the nondilutive funding which exists within the Canadian ecosystem.

How will you describe your team’s efforts to comprehend the credits, grants, and incentives available to Canadian clients and translate these opportunities into cutting-edge innovations?

Having worked in the credits, grants, and incentives space for over 17 years, a recurring theme I have heard from Canadian Companies has been their challenge to identify all the different sources of funding available to them, comprehend the eligibility criteria for each, and then meet the documentation and filing requirements.

Due to the vast array of credits, grants, and incentives available in the ecosystem, we identified this problem as one of data and scale.

Over the past number of years, we have spent a great deal of time building incentives expertise and developing cutting-edge technologies to help our clients with the identification, eligibility, and documentation, enabling them to understand and access the large array of funding that is available to them.  This was accomplished by indexing the massive amounts of information available and enabling their users to make better business decisions for our clients.

How does your team assist clients in identifying and accessing legislative and discretionary government funding sources to support their innovation programs?

We bring together rich expertise, cross-sector understanding, and vast experience as one of Canada’s largest dedicated SR&ED and Business Tax Incentives practices.

This enables us to truly understand our client’s businesses, products, and projects.  With this knowledge combined with the support of AI-based technology tools, we are able to ask the right questions and uncover the numerous funding opportunities which are available to our clients.

SR&ED Eligibility Guidelines For Small Businesses: What You Need To Know

Each Incentives discussion is broken down into 4 phases:

  • Phase 1: Identification of grants and incentives, and recommendations of available funding programs.  As many of these programs are discretionary, discussion of opportunities and risk is a part of this process.
  • Phase 2: Facilitation or Preparation of the application process
  • Phase 3: Post-approval compliance support
  • Phase 4: On-going support for past applications, reporting, and new funding opportunities

Once identified, our sector expertise enables us to efficiently and effectively assist our clients with the application process, and the resulting compliance requirements for the funding programs.

How can small businesses ensure, in accordance with the new SR&ED eligibility guidelines, that their work was performed to overcome technological uncertainty? 

SR&ED can provide substantial financial support for companies that are completing eligible work.  But to take advantage of SR&ED it is crucial to ensure that your technical team understands how to identify and document technological uncertainties.

Technological Uncertainty is defined as; whether a given result or objective can be achieved, or how to achieve it, is unknown or uncertain due to an insufficiency of scientific knowledge.

A Technological Uncertainty can be a key marker to the start of an SR&ED project, but based on this definition, what qualifies as a Technological Uncertainty within a project varies by industry, and is ever-changing as scientific knowledge advances; thus understanding the base principles of how to identify obstacles, and as a result document they are critical to the SR&ED process. 

SR&ED Eligibility Guidelines For Small Businesses: What You Need To Know

We at EY understand how challenging the identification and documentation of these critical points in any project can be.  Our consultants understand how to work with innovation teams and utilize existing project documents to identify when the team encountered the obstacle, and as a result when the SR&ED project started. 

As well, by understanding the challenges with Technological identification we developed the Business Tax Incentives Hub, an AI tool that can help companies track project documentation, as well as,  using a combination of machine learning and AI, helps to identify possible technological obstacles that arose during a project.

It is important to note SR&ED does not exist in a vacuum, there are numerous considerations such as tax and corporate structure just to name a few, which are impacted or impact an SR&ED claim.  When comparing against a boutique, our ability to bring in the right professionals and think holistically about the company’s business, not only helps get the most out of their SR&ED claim but will also help optimize other aspects of the business.

What, in your opinion, are the most effective strategies for assisting innovative builders in constructing a better working world?

Supporting innovative builders with the right knowledge and skillsets to be able to overcome obstacles that slow their speed of progress, is in my opinion the most effective way to assist innovative builders.  The pace of change in the business world has been accelerating, and it is impossible for companies to keep up to speed with all the financial, technical, and people challenges that they face. Thus ensuring that innovative builders have access to the skilled scaffolding and support they need to help them navigate what’s next so that they can focus on what they do best, and build the innovations to change the world. 

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