IP ownership is an important topic that comes up frequently when companies claim SR&ED. During this webinar, Boast Capital asked PCK to share more info about getting into the patent system, IP protection and how it impacts companies.
1. EVERYTHING YOU NEED TO KNOW TO
CLAIM SR&ED TAX CREDITS and
Intellectual Property Primer
Presented by Jeff Christie - Partner, Boast Capital
Andrew Currier - Partner, PCK
June 4, 2015
2. EVERYTHING YOU NEED TO
KNOW TO CLAIM SR&ED
TAX CREDITS
Presented by Jeff Christie, Partner, Boast Capital
June 4, 2015
3. OUTLINE
I. Overview of the SR&ED Program
II. Benefits of Claiming SR&ED
III. CRAâs Requirements
IV. Doâs and Donâts
V. Q&A
7. QUALIFYING CRITERIA
Must meet three criteria to qualify for SR&ED:
1. Technological Challenges
2. Technological Uncertainty
3. Technical Content or Iterations
8. ELIGIBILITY
The CRAâs 5 questions:
1. Was there a scientific or a technological
uncertainty that could not be removed by
standard practice/engineering?
1. Did the effort involve formulating a hypothesis
specifically aimed at reducing or eliminating the
uncertainty?
ContinuedâŚ
9. ELIGIBILITY
3. Was the adopted procedure consistent with the
total discipline of the scientific method,
including formulating, testing, and modifying the
hypothesis?
3. Did the process result in a scientific or
technological advancement?
3. Was a record of the hypothesis tested and
results kept as the work progressed?
16. TECHNICAL DOCUMENTATION
CRA requires that SR&ED documentation must:
ď§ Have been documented at the time the work was
completed
ď§ Highlight technical obstacles or challenges
ď§ Be dated
27. Š Perry + Currier Inc. 2015
Intellectual Property Primer
Andrew Currier, June 4, 2015
28. Š Perry + Currier Inc. 2015
28
⢠Trademark
⢠Copyright
⢠Industrial Design
⢠Trade Secrets
⢠Patent
⢠Semiconductor Protection
Overview of IP Regimes
29. Š Perry + Currier Inc. 2015
29
TRADEMARK PRODUCT ESTIMATED VALUE (2005)
Apple Computers/Software US $93.3 Billion
Google Software US $93.3 Billion
COCA-COLA Soft Drinks US $79.2 Billion
IBM Computers US $78.8 Billion
Microsoft Software US $59.5 Billion
GE Diversified US $46.9 Billion
McDonalds Fast Food US $41.9 Billion
⢠Intended to uniquely identify a product and/or its source.
⢠E.g.
⢠Should be registered in each country where operations will be carried out
or product will be sold.
⢠Law protects the mark as long as the mark continues to uniquely identify
the source.
⢠Can be the most valuable asset of a company:
Trademarks
30. Š Perry + Currier Inc. 2015
30
Trademarks
⢠Trademarks for Product Name(s), Company Name,
Logos etc. can all be important assets.
â˘You must exercise great care when using anotherâs
Trademark i.e. â âWorks with Apple iPods and
iPhonesâ can get you in trouble.
â˘Be extremely careful of âcomparativesâ i.e. â âis 50%
faster than a Galaxy S3â can also get you into trouble.
31. Š Perry + Currier Inc. 2015
⢠Grants author the exclusive right to
reproduce and/or use his or her work.
⢠Prevents unauthorized copying.
⢠Copying need not be complete, need only
be significant (either in quantity or quality).
⢠Does not prevent independent creation
of similar, or even identical, work.
⢠Requires:
⢠originality (very low threshold)
⢠and fixation (must physically be
recorded/stored/fixed) for at least an
instant in time.
⢠Copyright CANNOT be âinnocently
infringedâ. If you had no access to
another work, you cannot infringe.
31
Copyright
32. Š Perry + Currier Inc. 2015
⢠Copyright Can Exist in Wide Variety of Areas
⢠Product specifications/documentation
⢠PCB Layouts
⢠Firmware
⢠Drivers
⢠Interfaces & Memory Maps
⢠Software & APIs, e.g., Source Code, Object Code
⢠Databases
⢠Copyright Does NOT Exist in Ideas
ď§ Protects the expression of an idea, not the idea itself.
ď§ Note: Difficult to successfully make this argument in court.
⢠Copyright Does NOT Exist in âFunctionalâ Works
ď§ e.g., no copyright in the layout of the buttons on the remote for a VCR
(ďšďˇďźďťď´ď¸ďş) or in the Lotus 1-2-3 menus.
ď§ Note: Also difficult to successfully make this argument in court.
32
Copyright
33. Š Perry + Currier Inc. 2015
⢠Copyright Protection Lasts (virtually) Forever.
ď§ Typically Authorâs Lifetime + 50 Years (in some cases, longer).
⢠Copyright Infringement Spreads Like a Virus.
ď§ If you have access, or have had access, to someone elseâs
copyrighted materials (code, board layout, API, etc), you are
contaminated.
ď§ When you are contaminated anything you produce can be
held to be a âderivative workâ and one or more of the earlier
authors can claim rights to it.
ď§ Access does not have to be direct, it can be implicit/inferred.
ď§ Reverse Engineering and/or âclean roomâ operations must be
conducted VERY carefully (you should obtain legal advice
before starting.)
33
Copyright
34. Š Perry + Currier Inc. 2015
⢠Protects the ornamentation of a product.
⢠Must be registered in each country for which
protection is desired.
⢠Time limit exists within which application
must be filed.
⢠Have been used (in the U.S.) to protect
icons and fonts sets.
⢠Generally a weak form of protection unless
particular appearance is essential to
product.
ďś Can be useful for protecting
âconsumablesâ and/or components of a
system (e.g. - plug and socket)
34
Industrial Design (CDA)
Design Patent (US)
35. Š Perry + Currier Inc. 2015
35
Industrial Design (CDA)
Design Patent (US)
36. Š Perry + Currier Inc. 2015
36
Industrial Design (CDA)
Design Patent (US)
37. Š Perry + Currier Inc. 2015
⢠Protection comes from not revealing to public (e.g. formula
to Coca-Cola, locking firmware, etc ).
⢠Opposite of patents, i.e. - âA patent is simply a secret that
everybody knowsâ.
⢠Not governed by any statute â Usually Protected by
Secrecy, Restricted Access and Contract
⢠Judge made law protects against illegitimate disclosure
or misappropriation.
⢠Law does not prevent others from reverse engineering
product to discover secret.
⢠Important to have operational and contractual
processes to protect (NDAs, Contractorsâ Agreements,
Employment and License agreements).
37
Trade Secrets
38. Š Perry + Currier Inc. 2015
38
Trade Secrets
⢠APIâs, diagnostic tools and code, memory maps, operating
parameters, formulas, methodologies etc. can all be valuable trade
secrets.
⢠In many cases, the trade secret will not survive release of your
product.
⢠When considering relying upon trade secret protection, a balancing
must be performed between the value of the trade secret to you and the
difficulty for a 3rd party to reverse engineer that trade secret. If it is too
easy for a 3rd party to obtain the trade secret (by reverse engineering,
etc.) or the trade secret is immensely valuable (and thus more extreme
options â peeling of semiconductors, etc. may be justified) then trade
secret protection may not, by itself, be a viable option.
⢠Can be combined with Copyright to provide some level of additional
protection.
39. Š Perry + Currier Inc. 2015
⢠The âNuclear Weaponâ of Intellectual Property.
⢠Protects ideas and their implementation
⢠âFunctionalityâ rather than Aesthetic Features.
⢠Represents a bargain between the government and an
inventor.
ď§ Inventor must disclose the invention to advance public
knowledge.
⢠Patent comes from the Latin word for âTo Lay
Open.â
ď§ Government grants a time-limited monopoly as
compensation for the disclosure.
⢠Patents are property and an asset.
ď§ Like other assets, patents can be bought, sold,
encumbered, licensed, traded, etc.
⢠An âInsurance Policyâ.
39
Patents
40. Š Perry + Currier Inc. 2015
⢠âIPR skills are crucial if Canadian companies are to compete
internationally or else they will end up as âlambs for the slaughterâ
in the global marketplace.â Jim Basillie, Globe and Mail, 10 April, 2014
⢠âThe solution to this is patent exchanges with large companies and
patenting as much as we can. A future start up with no patents of
its own will be forced to pay whatever price the giants choose to
impose. That price might be high.â Bill Gates, Microsoft Internal Staff
Memo
⢠âJobsâ attitude was that if someone at Apple can dream it up, then
we should apply for a patent, because even if we never build it, itâs
a defensive tool.â Nancy Heinen, General Counsel Apple (pre 2006)
40
Patents
41. Š Perry + Currier Inc. 2015
⢠Gives the patentee the right to exclude others from
making, using or selling the invention for up to 20
years from the filing date of the application.
⢠Does NOT entitle the patentee to practice the
invention.
ď§ Many patents are âimprovementâ patents that build
upon existing technology that may, itself, be
patented.
ď§ Apple has many patents on the iPhone, but also had
to license many 3rd party patents from Qualcomm,
Nokia etc., relating to 3G and LTE communication
technologies.
ď§ You might require a license to practise your own
inventionâŚ
41
Patents
42. Š Perry + Currier Inc. 2015
⢠Patents can be âinnocently infringed.â
⢠Independent and âoriginalâ creation of previously patented invention by 3rd party is still
infringement of the patent.
⢠U.S. has doctrine of willful infringement, which can lead to an award of
triple damages.
⢠$612.5 Million settlement agreement reached between RIM and NTP after finding of
willful infringement.
⢠$290 Million Judgment against Microsoft after finding of willful infringement of i4i
patents.
⢠U.S. CAFC decision in Seagate establishes âobjective recklessnessâ as
threshold for willfulness.
⢠In many circumstances, this will be a difficult threshold for a plaintiff to meet/prove.
⢠A common defense against an allegation of âwillfulnessâ
⢠assert reliance on an opinion counselâs advice and work indicating that you were not
infringing.
42
Patents (Infringement)
43. Š Perry + Currier Inc. 2015
⢠A separate patent application must be filed in each jurisdiction in
which protection is sought.
ď§ Various systems exist (e.g., PCT, EPC, OAPI, etc.)
ď§ In some cases, you can be found to infringe on a patent in another
jurisdiction if you have customers in that jurisdiction
⢠Applications must be filed within certain time limits. Disclosing
the invention prior to filing the application may prevent an
inventor from obtaining a patent.
⢠As a patent application must contain full and complete
disclosure of the invention, any confidential information relating
to the invention will no longer be considered confidential.
⢠Patents and Trade Secrets are mutually exclusive.
43
Patents (Application)
44. Š Perry + Currier Inc. 2015
44
Trade Secret
Conception
Invention Disclosure Form
Committee Review
Prior Art Search?
Patent ApplicationPublication
Business
Decision
Invention Disclosure Process
45. Š Perry + Currier Inc. 2015
⢠DISCLOSURE (Inventorâs Obligation)
⢠Title, Abstract, Background, Summary, Detailed Description
and Drawings
⢠Combination of a Technical Document and a Legal Document
⢠CLAIMS (Governmentâs Obligation)
⢠Archaic legalese
45
PATENT SPECIFICATION = DISCLOSURE + CLAIMS
Anatomy of Patent
46. Š Perry + Currier Inc. 2015
⢠To obtain a patent, the invention must
ď§ Contain Statutory Subject-Matter;
ď§ Be New (Novelty);
ď§ Be Non-Obvious (Inventive); and
ď§ Be Useful (Functional).
46
Patent Requirements
47. Š Perry + Currier Inc. 2015
⢠To be patentable, an invention must be ânewâ and ânon-obviousâ
⢠To be new
ď§ The exact same invention must not be known, published, offered for
sale, or otherwise publicly available anywhere in the world (âprior
artâ).
⢠To be non-obvious
ď§ A âperson of ordinary skillâ must have exercised an âinventive stepâ or
âingenuityâ over the âprior artâ to arrive at the claimed invention.
ď§ E.g., Pencils are known; erasers are known. Is it âobviousâ to glue the
eraser on the end of the pencil?
ď§ Recent U.S. Supreme Court decision makes it easier to find an
invention obvious especially if it is a combination of prior art.
ď§ âA person of ordinary skill is also a person of ordinary creativity, NOT an
automaton.â
ď§ âA combination of familiar elements according to known methods is likely
to be obvious when it does no more than yield predictable resultsâ
47
Patent Requirements: Novelty and
Obviousness
48. Š Perry + Currier Inc. 2015
⢠These requirements go to the âheartâ of the bargain
ď§ Generally, monopolies are considered to be
detrimental to a free market.
ď§ If the invention was already available or obvious
then granting a monopoly is not a good bargain.
ď§ If the invention is new and inventive then
granting a monopoly may be justified in order to
encourage innovation.
48
Patent Requirements: Novelty and
Obviousness
49. Š Perry + Currier Inc. 2015
⢠To be patentable, an invention must be an âartâ,
âprocessâ, âmanufactureâ, âcomposition of matterâ,
or an improvement thereof.
⢠Most countries limit patent protection to
technological, functional devices and methods.
(e.g., machines, pharmaceuticals, electrical
equipment, computers, and ... software).
⢠In the U.S., for a claimed process (such as a
software method) to be eligible for patent, it must be
implemented with a particular machine or transform
an article from one state or thing to another (the
U.S. Supreme Court has held that this is not the
only test, but it is the one being applied).
49
Patent Requirements: Subject Matter
50. Š Perry + Currier Inc. 2015
SOFTWARE AND BUSINESS METHOD PATENTS
⢠A recurring area of controversy is whether âsoftwareâ and âbusiness
methodsâ are patentable.
⢠Tension is that âmachinesâ are patentable, but âabstract theoremsâ are
not.
⢠A subset of the tension of distinguishing between pure science vs. applied
science.
⢠âSoftwareâ per se is often viewed as a mere abstract theorem and
therefore not patentable.
⢠âHardwareâ is typically viewed as a âmachineâ.
⢠âSoftwareâ is generally treated as patentable provided the patent is
drafted in the context of hardware on which it is executed.
⢠âBusiness methodsâ can often be expressed through software, so there
are openings to draft business methods as software executing on
hardware in order to bring them within the scope of patentable subject
matter.
⢠Examples...
50
Patent Requirements: Subject Matter
51. Š Perry + Currier Inc. 2015
51
Patent Requirements: Subject Matter
â˘Business methods that incorporate technical features are generally eligible for
patentability, whereas business methods that broadly encompass mere abstract financial
concepts are not
â˘Laws of U.S., Canada and Europe in relation to business method patents are generally
converging
â˘Recent U.S. Supreme Court case invalidated the business method patent at issue in that
case, but left the door open for inventions that are not solely directed to an abstract idea
â˘Although generally considered a negative period for business methods patents, the
pendulum with regard to business methods has swung several times over the last 40
years in favour and against business method patents
â˘Even during negative pendulum swings, financial service institutions continue to file and
pending patent applications are consistently used as a business tool
52. Š Perry + Currier Inc. 2015
52
U.S. Filing
International (PCT)
Filing
Canadian Filing
Publication of
Application
12 Months
12 Months
30 Months
from U.S. Filing
18 Months
Patent Filing
53. Š Perry + Currier Inc. 2015
53
File Application
Request Examination
Prepare
Response
Examinerâs
Report
Patent Issued Appeal?
Final RejectionOffice Action
Patent Prosecution (Each Country)
54. Š Perry + Currier Inc. 2015
54
Business Criteria to Evaluate Patentability
of Technology
55. Š Perry + Currier Inc. 2015
55
Business Criteria to Evaluate Patentability
of Technology
56. Š Perry + Currier Inc. 2015
⢠Many countries have enacted Semiconductor Protection
legislation to prevent âpeelingâ and copying of chip designs.
⢠While the legislation prohibits âcopyingâ, it does not prohibit
reverse engineering so it may be of limited use.
⢠While initial interest was high, by the time the legislation had
been enacted the issue seemed to be moot and few
applications have been registered.
56
Semiconductor Protection
57. Š Perry + Currier Inc. 2015
57
Patent Copyright Trade-Mark Industrial Designs Confidential
Information/Trade Secret
Type of
protection
exclusive right, privilege and
liberty of making,
constructing and using the
invention and selling it to
others to be used
the sole right to produce or
reproduce the work or any
substantial part thereof in any
material form whatever
the exclusive right to the use
throughout Canada of the trade-
mark in respect of specific wares
or services
the exclusive right to make,
import, sell, rent, offer or
expose for sale or rent, any
article in respect of which the
design is registered
Misuse of information or
trade secret
Scope of
protection
Broad - protects the invention
as claimed, not just the
particular embodiment
described in the patent
specification
Narrow - protects only the
work or any substantial part
thereof
Varies - depends on the context Narrow - protects the design or
a design not differing
substantially therefrom
Narrow - protects only the
specific information or trade
secret
Term of
protection
20 years from filing Life of Author + 50 years or
75 years from creation of
work
Indefinite, as long as the mark is
in use
10 years from registration date Indefinite, as long as secrecy
can be maintained
Source of
protection
Statute Statute Statute and common law Statute Statute and common law
Qualification(s)
for protection
Must file an application with
CIPO that complies with the
terms of the Patent Act,
including proper subject
matter, novelty,
inventiveness, and utility
Copyright attaches to every
work automatically upon
creation, but registration
provides additional benefits
Common law rights are
territorially limited, although
filing an application with CIPO
for a trade-mark that distinguishes
goods or services from
competitors and is not confusing
may result in a registration that
extends protection across Canada
Must file an application with
CIPO that complies with the
terms of the Industrial Design
Act, including proper subject
matter, originality and novelty
Must be kept secret and
disclosed only in confidence
Maintenance
provisions
Annual maintenance fees None 15 year renewal fees, if registered A single maintenance fee due at
5 years
None
Independent
creation defence?
No, unless prior inventor was
first to file or disclosed prior
to the claim date so as to
anticipate
Yes No No Yes
Comparison of Different Types of IP
58. Š Perry + Currier Inc. 2015
58
Cited by the Supreme Court of Canada. See Teva
Canada Ltd. v. Pfizer Canada Inc
http://bit.ly/1gUGgsg
Regular Updates at PCKReporter.com
59. Š Perry + Currier Inc. 2015
59
Our Expertise
Andrew Currier, P.Eng.
Shareholder
currier@pckip.com
Andrew is a recognized leader in the Canadian intellectual property field. Andrew
is co-author (with Stephen Perry) of Canadian Patent Law (LexisNexis 2012, 2nd
Edition, 2014), the first comprehensive text on the subject by a practitioner in over
30 years. Justice Roger Hughes, in his introduction to the book describes it as,
ââŚa thoroughly scholastic work dealing with many areas of patent law and
prosecution in Canadaâ which is âuseful, indeed essential, reading for anyone
involved in or interested in any aspect of Canadian patent law and prosecution.â
Andrewâs contribution to the practice includes his experience as a lawyer at one of
Canadaâs most respected law firms, practical business experience gained as
general counsel and vice-president of a TSX-listed company, and as a lecturer
and adjunct profession in intellectual property law at the University of Western
Ontario and guest lecturer in trademarks at the University of Toronto. Andrew has
also been actively involved in several trademark enforcement proceedings.
Over the past several years, Andrew spearheaded the transition of PCK from a
paper-driven practice to its current status as a largely paperless, database driven
practice that enjoys huge efficiencies and service quality improvements derived
from automated processes and workflows.
EDUCATION
Bachelor of Laws, University of Western Ontario
Bachelor of Science, Electrical Engineering, Kettering University
MEMBER
Barrister and Solicitor, Law Society of Upper Canada
Professional Engineer, Professional Engineers of Ontario
Intellectual Property Institute of Canada (IPIC)
American Intellectual Property Law Association (AIPLA)
Institute of Electrical and Electronic Engineers (IEEE)
Intellectual Property Ownerâs Association
FĂŠdĂŠration Internationale des Conseils en PropriĂŠtĂŠ Industrielle (FICPI)
60. Š Perry + Currier Inc. 2015
60
Our Expertise
Stephen Perry, P. Eng.
Shareholder
perry@pckip.com
Stephen has practiced in the field of Intellectual Property since 1985, with a focus on
developing and managing international portfolios for Canadian technology companies.
These portfolios cover a broad range of innovations in the fields of telecommunications,
electronics, software, display technology, and medical imaging. Stephen is co-author
(with Andrew Currier) of Canadian Patent Law (Butterworths, 2012, 2nd Edition, 2014).
A prolific author and speaker, Stephen has published an extensive series of articles on
patent and industrial design issues, and writes the Industrial Design chapter in Canadian
Forms & Precedents â Commercial Transactions (Butterworths). He lectures frequently
on software patents and industrial design issues, traveling regularly to international
conferences and seminars.
EDUCATION
Bachelor of Science, Electrical Engineering, Queenâs University
AWARDS
J. Edward Maybee Memorial Award, Intellectual Property Institute of Canada, for the
highest overall standing in the Canadian Patent Agents Qualifying Examination, 1985
MEMBER
Intellectual Property Institute of Canada (IPIC)
American Intellectual Property Law Association (AIPLA)
FĂŠdĂŠration Internationale des Conseils en PropriĂŠtĂŠ Industrielle (FICPI)
Professional Engineers of Ontario
Institute of Electrical and Electronics Engineers
61. Š Perry + Currier Inc. 2015
61
Our Expertise
Ryan is a registered Canadian and US patent agent experienced in software,
communications, mechanical, electromechanical, thermodynamic, and energy
technologies. Ryan has over a decade of patent experience, which includes a
wide variety of work for many multinational companies. His experience ranges
from helping startups obtain cost-effective patent protection to managing a multi-
million dollar patent portfolio for one of Canadaâs flagship high-tech companies.
In the past, Ryan worked for four years based in Asia obtaining US patent
protection for some of the worldâs most successful electronics manufacturers.
More recently, Ryan obtained patents and conducted product-clearance and
patent-validity analyses for an Ontario-based manufacturer of injection molding
technology. Ryan obtained his B. Sc. in mechanical engineering from the
University of Alberta in 1997. Prior to becoming a patent agent, he worked for
five years as an engineer.
EDUCATION
Bachelor of Science, Mechanical Engineering, University of Alberta
AWARDS
CSME Glatz Memorial Award 1997
Deanâs Research Award, University of Alberta
MEMBER
Intellectual Property Institute of Canada, Affiliate member (IPIC)
Ryan Smith, B. Sc. (Eng.)
Patent Agent
smith@pckip.com
62. Š Perry + Currier Inc. 2015
62
Our Expertise
Robert Stratton
Patent Agent
stratton@pckip.com
Bob Stratton has been working in the patent and intellectual property
fields since 1989 and qualified as a patent agent in 1991. Bob spent
the first twelve years of his career at two Bay Street law firms where he
acted for a variety of domestic and foreign technology companies. Bob
finished his time with the second law firm as partner and head of its
Toronto Intellectual Property group.
Bob then started down a varied career path, with time spent as in-
house counsel at a start up telecommunications equipment company;
a consumer electronics company; a mobile computer manufacturer;
and as president of his own patent firm.
Bob has a degree in Electrical Engineering, with a minor in Computer
Engineering, and is experienced in developing and managing
intellectual property relating to a variety of technical fields, including
computer hardware and software, automotive systems, consumer
electronics, telecommunications, water treatment systems, electrical
motor control systems, semiconductor technologies, and others.
Bob has extensive experience in preparing and managing the legal
aspects of clean room reverse engineering efforts and copyright issues
relating to software and computer systems. Bob has also assisted in
the sale and other monetization of patent portfolios.
Canadian R&D tax credit program administered by the Canada Revenue Agency (CRA)
~95% of claims are considered experimental development
In 2013, the government provided over $3.4 Billion in assistance to 22,000 claimants
SR&ED returns are called Investment Tax Credits (or ITCs)
Federal budget 2015 â nothingâs changed
Work must meet three criteria:
Technological Challenges
Technological Uncertainty and how to overcome
Technical Content or iterations
CRA defines this as âWork performed for the purpose of creating new, or improving existing, materials, devices, products, or processesâ
Whatâs eligible?
Work must meet the three criteria
Work must meet three criteria:
Technological Advancement
Technological Uncertainty
Technical Content
CRA defines this as âWork performed for the purpose of creating new, or improving existing, materials, devices, products, or processesâ
Can occur in various industries (both low and high tech)
Image recognition engine for orthotics
Combining existing technology or software that was not intended to work together
Developing new software
Improving software to work with legacy systems
Adapting a product for use it was not intended to be used for
As well as large and small companies
Small to medium sized enterprises (SMEs) are defined as generating less than $500K income in that fiscal year.
Non-arms length subcontractors
Salaries and sub-contractors MUST be Canadian-based
Assuming all expenses are paid, SMEâs qualify for refundable investment tax credits (or ITCS). This means they get a cheque back from the government
Foreign owned corporations, publically-traded, or Canadian controlled companies that are earning more than $500K in revenue per year
Lowered the federal SR&ED return rate from 20% to 15% as of Jan 1, 2014
ITCs are non-refundable. They are simply tax credits that be carried back 3 years or forward indefinitely.
Salaries and sub-contractors MUST be Canadian-based
Non-arms length subcontractors
Extremely important as the CRA has become very strict on claims that do not fulfill their requirements.
Technical documentation needs to be:
Contemporaneous â documented at the time of the experimentation.
Highlight technical obstacles or challenges
Dated
Examples of technical documentation: Engineering notebooks, Versioning Control on software Iterations, Whiteboard images, Emails.
Just be aware. Some agile software development teams have needed to implement a better documentation system for their SR&ED eligible projects.
Each company works very differently - we can help you set up an efficient system for your company.
Recommendations:
Track 100% of your time. This goes beyond your âSR&ED specificâ projects. Track your admin time, your project management time, etc.
Share what needs to be tracked from a financial/accounting perspective and give some tips on how to do that
18 Months past the fiscal year end
Current Filing= 6 Months to file taxes after fiscal year end
Amended Filing= 7 Months to 18 month past fiscal year end
CRAâs success rate at meeting these turnaround times is 96%
The deadline for companies with a December fiscal year end is June. So if you have a December year end and you want your claim turned around in less than 6 months, nowâs the time to file your claim.
The CRA only took 68 days, on average, to process a CCPC current claim in 2012.
The CRA only reviews SR&ED expenditures and technical work.
FTCAS â new service launched Jan 2014, it is an in-person meeting with the CRA to review your first submitted claim and to set you up for success for the next claim.
Will get reviewed every 4/5 years
Most important way to support a review claim is documentation and time tracking.
Recommended approaches for claiming R&D grants:
Pay yourself or staff (sweat equity is $0 equity)
SR&ED require spend / NRC â solid business model
Incorporate company and ensure clear IP ownership. Company vs contractor
Iâll send you a link to access the Ultimate SR&ED Guide. The guide goes into detail on documentation, calculations and more. Itâs an interactive Guide that we will update as the program changes
The CRA has strict documentation requirements, which we cover in the guide.