What expenditures qualify for SR & ED?
There are two methods in which you can claim SR&ED expenditures. One method is known as the traditional method and the other method is known as the proxy method. Proxy Method: Most companies claiming SR&ED tax credits claim under the proxy method. The proxy method is a simple approach to claiming SR&ED expenditures. Under the proxy method the following expenditures may be claimed: • Wages for staff doing SR&ED work for “hands on” SR & ED activities. • Materials effectively used up or consumed in performing SR & ED (note that materials which ultimately go into commercial production or are sold need special consideration and analysis to determine if they may be claimed). • Payments made to contractors to carry out SR&ED on behalf of the Company. • Leased equipment to the extent that 90% of the lease relates to SR & ED (a portion of SR & ED tax credits claimed to the extent that 50% of the lease relates to SR & ED). • Capital equipment to the extent that it is new and used 90% or more in
