Case Study: Saving Time and Money

Technology Tax Credits combines technical and accounting expertise to help a Canadian manufacturing firm identify three research projects from one product technology; fast turnover in SR&ED claim process lowers a years' worth of research costs that would have otherwise been lost.


Triac Engineering Ltd. was at risk of losing over a hundred thousand dollars in potential research tax credits because time was running out. The company's Scientific Research and Experimental Development (SR&ED) claim for their 2005 fiscal year was due in two weeks, and there wasn't enough staff available to compile and submit the claim on time. With the deadline looming, Triac turned to the SR&ED experts at Technology Tax Credits to do the job.

Triac is a Calgary-based engineering and manufacturing company that employs a team of 15 engineers, machinists and technicians serving primarily the oil and gas, surveying, and forestry industries. Triac dedicated much of 2005 developing overmolded plastic products - that is, products protected by a highly durable and waterproof plastic overlayer. These products are manufactured by injecting molding plastic over top of fragile electrical components, like cables and electronic connectors.

The research was in developing and modifying plastic molding technology so that it can protect the components from the hostile environments typically found in oil and gas operations. The components are often exposed to severe temperatures, wet conditions and harsh chemicals that not only cause premature failures, but also make in-situ replacement of failed components expensive and difficult, if not impossible. Through experimental development, Triac was creating a product that could extend the service life of the electrical components well beyond that of the industry norm.

The Process

Andy Kveps, President of Triac, met the Technology Tax Credits team at an industry trade show. He was already familiar with the SR&ED program, having compiled the company's claims himself in past years. But the busy entrepreneur was focusing on advancing the company's technology and didn't have time to compile the claim that year.

After chatting with Andy, the Technology Tax Credits team determined that Triac was probably eligible to receive a significant SR&ED tax credit refund for their plastic molding projects. However, if they missed the filing deadline, they would miss out on claiming 12 months' worth of research expenses - amounting to hundreds of thousands of dollars.

Wayne Powell, President of Technology Tax Credits, explains the SR&ED claim deadlines: "You can file a claim within 18 months of your fiscal year end. So if your fiscal year end is in December and you want to claim research done in 2005, you have until June 2007 to file your return. This was exactly the case with Andy at Triac."

In some cases, the Canada Revenue Agency (CRA) also allows companies to claim research expenditures going back 30 months back in time. Wayne continues, "Based on this, Triac could still claim research costs incurred from January 2005 - over two years back - but to do that, we needed to submit the 2005 claim by the end of June. We only had two weeks to do it, but we didn't want Triac to lose the opportunity to get some research money back. So we pulled together to meet the deadline."

Only a few days after first meeting Andy, Technology Tax Credits' Vice President of Finance, Bryan Korolischuk, came with one of his engineering consultants to conduct a follow-up site visit to Triac. Together, they held a concise interview with key engineering staff to document the technical advancements in the injection molding technology. In one hour, they identified three distinct research projects that were eligible for research tax credits. These multiple projects together amounted to a substantial SR&ED claim.

"Our advantage is that we have the technical background to quickly recognize what is research and what isn't," says Bryan. "We also recognize that often research just doesn't happen in a lab - it takes place on the desktop, on the shop floor, and in the field."

The Technology Tax Credits team offers technical experience in various industries, including software, manufacturing, geoscience and engineering - a well-rounded background that allows them to write the thorough technical research reports needed to meet the SR&ED claim requirements. They also offer accounting expertise and over 15 years of SR&ED claim experience to ensure that the financial forms accompanying the claim will be accurate and complete.

Results & Impact

Technology Tax Credits compiled and submitted the SR&ED claim on behalf of Triac within the two-week deadline. The CRA approved the claim and the tax credit refund came earlier than expected - within 3 months of filing the claim. CRA can and has taken up to 8 months to process this type of claim. However, a clearly written, professionally prepared claim with solid financial documentation has a good chance of being approved without a review.

With the cash back, Triac was able to further develop the plastic molding technology within a shorter time frame than originally planned. "The fact that Technology Tax Credits has both technical and financial expertise really helped us to claim more research projects and eligible expenses than I could have identified myself," says Andy, "I would definitely recommend their services, and we'll continue to use their services in the future."