The Canadian construction sector is losing out on millions in research and development tax credits even though a good number of sector stakeholders are already doing everything the Canada Revenue Agency requires for them to qualify.
It’s a loss the Canadian Construction Association (CCA) and Canadian Construction Innovations (CCInnovations) are determined to rectify. On Nov. 25 the organizations announced a partnership with Invennt Business Inc. to promote awareness and access to the Scientific Research and Experimental Development (SR&ED) credits available. On Dec. 4 Invennt and the CCA teamed up to present a how-to webinar on how to secure the tax credits.
The session was hosted by Tim Fitch, U.K.-based Invennt director and a civil engineer with expertise in the geotechnical and rail sectors. Invennt will be opening a Toronto office in January.
“We looked at Canada and the Canadian construction industry is not getting its just desserts out of the system that exists in Canada,” Fitch told the webinar followers. “We can see from our experience there is a massive opportunity for Canadian construction.”
Mary Van Buren, CCA president, commented in a statement introducing the partnership, “Our goal is to promote and drive innovation in the industry, and this new valued service will make it easier for our members to have a better chance at getting an SR&ED credit.”
The construction sector accounts for seven per cent of Canada’s GDP but firms in the sector are only claiming 0.7 per cent of the total value of SR&ED credits the CRA approves each year, Fitch said.
There are ample opportunities available for more firms to qualify than they might think, he said — there need not be scientists in lab coats undertaking research, he said, but merely firms engaged in problem-solving that extends their overall capabilities or making improvements to an existing process.
“If you think about delivering projects for your client, complicated projects, nearly always there is going to be some part of the project that is new, innovative, unique,” said Fitch.
Firms that develop and improve construction methods, materials and design to deal with unusual site conditions, advance solutions through the development of new materials or find easier, safer or greener ways of working may all qualify for SR&ED credits, he explained.
During the webinar Fitch presented a half dozen case studies of firms in the U.K. and Canada who were able to parlay systems improvements into SR&ED credits. Among them:
One contractor specializing in utilities was gathering field data on workers’ phones to create efficiencies in their systems. When its claims were approved, not only were the firm’s finances dramatically improved but staff morale experienced a major boost, Fitch said.
BCM, a European civil engineering contractor that is a leader in the rail sector, developed a new railway signage product that improved the efficiency of track maintenance.
Vascroft, a London, U.K. building contractor that was working in constrained spaces in the London financial district, devised new piling methods that enabled them to complete work with minimal ground vibration.
A Canadian contractor that specializes in parking garages using precast concrete and steel manufactured off-site used a low-loader that cut unloading time by 85 per cent.
In each case, the firms made significant successful SR&ED claims to their respective tax agencies — the rules in the two countries are very similar, Fitch said, and in fact Canada pioneered the R&D credit regime in 1984 and the British copied it.
Fitch said SR&ED claims are appropriate for firms across the spectrum, including consultants, architects, engineers, contractors and others.
Invennt has consulted on a total of 140 successful claims for Canadian and U.K. construction firms, with $12.5 million in benefits obtained this year.
“It is a significant chunk of cash and the opportunity for Canada is huge,” Fitch said.
The CCInnovations was established by the CCA with a mandate to pursue innovations in the sector.
CCA members can access the CCA/CCInnovations service partnership with Invennt through their local construction associations.