In the intricate landscape of preparing Scientific Research and Experimental Development (SR&ED) claims, it’s not uncommon to encounter projects that seem too small, too insubstantial, or too lacking in support to warrant the effort and cost of including it in a claim. This perspective can inadvertently lead to missing opportunities with SR&ED potential. The real question emerges: when is a small SR&ED project not too small? The answer lies in the concept of a “seed project”.
Seed Projects are Opportunities for Growth
Before relegating a small project to the SRED reject pile, it’s crucial to reassess its potential as a seed project. Seed projects are those that, although initially appear minor in effort and cost, hold the promise of companies being able to claim more SRED-eligible expenses. If this work is characterized by early identification of key technological uncertainties, which pave the way for future SR&ED work aimed at resolving these uncertainties—the crux of an SR&ED claim—there is good reason to consider claiming it.
Identifying a Seed Project: When Uncertainty Breaks Through Standard Development
How can one spot a seed project amidst a forest of a larger body of R&D work? There are four indicators:
- When your organization is engaged in resolving a problem, even in an unofficial “skunkworks” capacity, ’this is worth noting. Technological uncertainties often arise when standard approaches fail, necessitating innovative thinking and experimentation. But it doesn’t have to be “rocket science” to have value for SRED.
- A project that addresses obstacles or uncertainties related to an emerging, expanding, or strategically important line of business indicates potential for SR&ED.
- Persistence in the face of technological setbacks is another telltale sign of a seed project. The willingness to continue exploring despite early failures especially if it’s inherently unsure how to achieve the end goal. This is really a germination point for SRED.
- If a project starts towards the end of the fiscal year, but wasn’t completed by the end of the fiscal year. Projects only need to be started during the fiscal year being claimed and can be claimed even if they’re not completed. In fact, claiming the start of a project can make writing up future claims easier because they can just be built around this “seed”. It’s considered “low-hanging fruit” because the basis of the SR&ED story is already there.
Deciding against claiming small projects may seem justifiable through a short-term cost-benefit lens; however, this approach risks overlooking projects that actually capture SRED-eligible expenses that can add to the tax credit value of the overall claim’. Early identification and support of these projects maximizes the increased potential for eligible SR&ED expenses to claim.
Working with an experienced SR&ED consultant can significantly enhance your company’s ability to identify and capitalize on these seed projects for SR&ED tax credits.
Expertise in Cultivating Potential Seed Projects
The first step in harnessing the potential of seed projects is picking them out from amongst the more obvious leafier fronds of R&D work. SRED Unlimited consultants excel in recognizing the potential of small projects. Our expertise allows us to discern the subtle signs of a seed project, from the initial identification of strategic business goals to tackling of technological uncertainties in alignment with those goals. This discernment enables your company to claim expenses that might otherwise have remained buried.
Once a seed project is identified, the journey from potential to an actual SR&ED claim submission requires diligent collecting of details and preparing of the physical writeup. SRED Unlimited does this for you.
SRED Unlimited consultants will also guide you through the process of documenting any future work as the seed work germinates and spreads out. This can ease the burden of preparing for the next claim. By establishing a robust framework for tracking progress, unearthing challenges, and recording outcomes, SRED Unlimited can help you build a compelling narrative around your seed projects, significantly enhancing your claim’s credibility and viability.
Maximizing Claim Potential with SRED Unlimited
SRED Unlimited works closely with you to explore all possible avenues to maximize your SR&ED claim. This includes identifying additional eligible expenses, advising on how to present the right project “angle” to demonstrate SR&ED eligibility, and ensuring that claims are structured to capture the fullest scope of eligible work. This comprehensive approach ensures that you not only recognize the potential in small SR&ED projects but also capitalize on them to the fullest possible extent.
In the world of SR&ED claims, overlooking the potential of seed projects can result in missed opportunities for claiming eligible expenses. Leveraging SRED Unlimited’s expertise can help the journey of a seed project grow from a budding idea to a fully-fledged SR&ED claim, and your company realize the benefits of innovation initiatives that might otherwise have been missed.
We bring a personal touch to what can often be a very impersonal process.
