Innovation & Saving on Taxes: Manitoba’s SR&ED Credit
The SR&ED credit (often called a SRED Credit) is a way for your business to invest in innovation while saving on its taxes. Below you’ll learn about why SRED credits are offered, who they’re for, and how you can get started on your own.
This robot saves on his taxes.
Why would the Manitoba government offer something like SRED?
Manitoba’s government wants Manitoba businesses to take risks on innovation. More risk, the greater chance of break-through technology that could add jobs to the economy and benefit Manitoba industry. Also, they like the tax dollars when risks pan out. Just ask California and the Silicon Valley bonanza from the past couple decades.
Who is eligible for Shred in Manitoba?
If you are in the software, manufacturing, or engineering sectors, you are likely eligible. The actual tax credit has to be applied towards a specific project though. You can’t get a rebate on general overhead just by identifying as a tech-entrepreneur. Some things that are eligible are developing or improving products, processes, or software applications.
Below are some additional examples of eligible expenses. Again, whatever you expense is it has to be part of a SH&RD activity/project.
expenses for supplies and materials used.
wages paid for technical, support and supervisory roles.
outside contractor costs.
leases of equipment.
the portion of overhead costs attributable to the SR&ED activity.
Something Else You Might Be Eligible For
Find out if a Corporate Care Health Spending Account is right for you. We average $1750 a year in tax savings for our clients.
How does SRED in Manitoba work?
If you have a product you are developing, you can claim the expenses for that product like you normally would. But then in addition to that, you can receive an investment tax credit that can be refundable or non-refundable.
How can I start a SRED eligible project today?
CRA has a self-assessment tool where you can determine if the work you do might be eligible for SRED credits.
Does applying for SRED credits take a lot of work?
Applying for SRED credits takes both PLANNING and DOCUMENTATION. The steps resemble the work you’d do for a high school science project:
Identify and state an obstacle/problem.
Formulate an objective.
Identify and document how you will go about solving the problem by experimentation, analysis and testing.
Document and record the experimentation, analysis and testing, including all prototypes.
Are you able to formulate your project within these terms? If so, you’re well on your way. Specifically, documentation is crucial. Getting approved is a matter of tax authorities seeing evidence that your SRED activities are scientific and reasonable. And it’s much easier to document something properly from the beginning. So one last piece of advice: don’t wait until the end of your SRED project and then try and cobble together evidence after the fact.
Ready to SRED?
Reach out to the CRA to get some guidance. For Manitoba companies the SRED division is covered through the Edmonton Tax Services Office. Call them at 1-866-578-4538 to start the conversation.