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24C has helped our clients obtain over $20 million in SR&ED tax credits.

R&D Funding

The Government of Canada sponsors two major R&D funding programs:

  • SR&ED (Scientific Research and Experimental Development) tax credits, which offset the special costs of overcoming limitations in existing technology in order to achieve innovation. SR&ED credits are awarded on a demand-basis, provided the Company establishes through documentation that the work claimed satisfies legislated eligibility criteria. For Canadian-controlled private companies (CCPCs) with less than $50 million in assets, the credits are refundable, meaning the Company receives cash back even if they have no taxable income. SR&ED has been a great support to start-up companies.
  • IRAP (the Industrial Research Assistance Program), which offers grants to underwrite the risks of R&D. The funding pool is rather limited and competition is based on both technical merit and business case.

Ironically, 24C Group never sought IRAP or SR&ED funding. We took one look at the brochures and concluded the paperwork was too onerous and the funding too meagre. Subsequent experience proved us wrong!

SR&ED claim preparation is the one service our clients request most, once they realize that nuggets of technological frustration, leading to even minor innovation, may form the core of a claim that encompasses a considerable amount of SR&ED-eligible supporting work. Thus, the high-risk element of an R&D project can justify a much larger SR&ED claim than one would have assumed.

Typically we recover 50% or more of R&D costs. For example, suppose an Alberta-based CCPC spends $300,000 on salaries for R&D, and $200,000 on operations staff who work closely with R&D. Crafting a strong, logical SR&ED project description, we could claim (for example) 80% of R&D salaries and 15% of operations. These are topped-up by an overhead proxy amount (60% for calendar 2013, 55% for 2014).  The refundable tax credit would be:

      • $ 300,000  (R&D base salaries)
      • x 80%  (eligible portion of work)
      • -----------
      • $ 240,000  (eligible R&D)
      • +
      • $ 200,000  (Operations base salaries)
      • x 15%  (eligible portion of work)
      • -----------
      • $ 30,000  (eligible Ops)
      • -----------
      • $ 270,000  (total SR&ED labour)
      • + 55%  (overhead proxy amount for 2014)
      • -----------
      • $ 418,500  (SR&ED cost)
      • x 10%  (refundable Alberta ITC rate)
      • $  41,850  (Alberta ITCs)
      • $ 376,650  (total SR&ED cost less Other Gov’t Support, i.e. Alberta ITCs)
      • x 35%  (refundable Federal ITC rate)
      • $ 131, 828  (Federal ITCs)
      • -----------
      • $ 131,828  (refundable Federal tax credit)
      • $   41,850  (refundable Alberta tax credit)
      • -----------
      • $ 173,678  (total refundable tax credit)

The key to success is rigorously classifying objectives, obstacles and activities relative to SR&ED program criteria, and clearly, convincingly describing the project in a well-formed T661 narrative.
24C helps R&D companies find those SR&ED nuggets, identify the eligible supporting activities, and make a strong case to the Canada Revenue Agency (CRA).

Under the legislation, CRA can require considerable documentation to substantiate a claim; in practice, they give new applicants a break but expect them to improve over time. We also mentor our clients in growing their SR&ED competency through appropriate project planning, documentation and resource tracking.

 

Technology Strategy

24C team members have many years’ experience planning and executing software product lifecycles. Combining this with research experience and a deep understanding of computer technology, we have learned how to envision, craft and implement business-specific technology strategies.

An effective strategy is visionary yet practical. Consulting with stakeholders in Marketing, R&D and Finance, we develop a shared understanding of the market and the Company’s unique insights into it. If the Company has an invention in place or on the drawing boards, so much the better. From market and invention we derive the Company’s technology value proposition, which the strategy will support and enhance.

We review supporting and competing technologies, to find an edge the Company can exploit for competitive advantage. We envision how the Company could extend that edge now, next year, and for years to come. “How” includes research on underlying technologies, new product development, building core R&D competencies within the Company, financing the R&D, and protecting intellectual property.

The technology strategy document includes a motivating story, vision and mission statements, review of facts and forecasts, proposed technology descriptions, and action plan with resource requirements.

 

Analysis and Design

24C practiced agile development years before XP and Agile were popularized. All 24C designers / developers were trained in object-oriented programming. 24C has worked on both back-end and user-facing systems.

The 24C approach to software design is to understand the problem outside-in and then inside-out: that is, first get the big picture in terms of business and user requirements and an existing technology base; then drill down to objects and functions; and then reinterpret those objects and functions through analysis, prototyping and user feedback, to identify design patterns, metaphors and abstractions, yielding a simpler, more general and adaptable design.

To ensure all stakeholders’ requirements and ideas are heard, we spend time living in their environment, talking to them over coffee, lunch and in small group meetings. We involve them in co-creating presentations and prototypes.

On the formal side, our preferred approach is to identify domain knowledge in the form of an ontology, from which we derive system logic as processes and rules. Implementing functionality in terms of rules tends to flatten and simplify system architecture and allows for adding or modifying functionality and business logic without requiring code design changes. It also supports more flexible user interfaces, especially when combined with the model-view-controller design pattern.

 

Intellectual Property Protection

In the hyper-evolving world of software, patents may not seem worthwhile — until a competitor hits you with an infringement claim. At 24C, we understand the value of patents as trading cards, and as an investment confidence-builder.

24C team members have co-authored U.S. patent applications for Apple Computer, Differential (Valicert) and Preo Software. We have also helped our clients find the holes in competitors’ patent claims.

 

Copyright © 2010 by 24C Group Inc.

 

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24C Consulting Services
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24C has helped our clients obtain over $10 million in SR&ED tax credits.

R&D Funding

The Government of Canada sponsors two major R&D funding programs:

  • SR&ED (Scientific Research and Experimental Development) tax credits, which offset the special costs of overcoming limitations in existing technology in order to achieve innovation. SR&ED credits are awarded on a demand-basis, provided the Company establishes through documentation that the work claimed satisfies legislated eligibility criteria. For Canadian-controlled private companies (CCPCs) with less than $50 million in assets, the credits are refundable, meaning the Company receives cash back even if they have no taxable income. SR&ED has been a great support to start-up companies.
  • IRAP (the Industrial Research Assistance Program), which offers grants to underwrite the risks of R&D. The funding pool is rather limited and competition is based on both technical merit and business case.

Ironically, 24C Group never sought IRAP or SR&ED funding. We took one look at the brochures and concluded the paperwork was too onerous and the funding too meagre. Subsequent experience proved us wrong!

SR&ED claim preparation is the one service our clients request most, once they realize that nuggets of technological frustration, leading to even minor innovation, may form the core of a claim that encompasses a considerable amount of SR&ED-eligible supporting work. Thus,  one small high-risk element of an R&D project can justify a much larger SR&ED claim than one would have assumed.

Typically we recover 50% or more of R&D costs. For example, suppose an Alberta-based CCPC spends $300,000 on salaries for R&D, and $200,000 on operations staff who work closely with R&D. Crafting a strong, logical SR&ED project description, we might claim 80% of R&D salaries and 15% of operations. These are topped-up by 65% as overhead. The refundable tax credit would be:

      • $ 300,000 (R&D base salaries)
      • x 80% (eligible portion of work)
      • -----------
      • $ 240,000 (eligible R&D)
      • +
      • $ 200,000 (Operations base salaries)
      • x 15% (eligible portion of work)
      • -----------
      • $ 30,000 (eligible Ops)
      • -----------
      • $ 270,000 (total SR&ED labour)
      • + 65% (overhead proxy amount)
      • -----------
      • $ 445,500 (SR&ED cost)
      • x 35% (refundable federal ITC rate)
      • x 10% (refundable Alberta ITC rate)
      • -----------
      • $ 155,900 (refundable federal tax credit)
      • $   15,590 (refundable Alberta tax credit)

The key to success is rigorously classifying objectives, obstacles and activities relative to SR&ED program criteria, and clearly, convincingly describing the project in a well-formed T661 narrative.
24C helps R&D companies find those SR&ED nuggets, identify the eligible supporting activities, and make a strong case to the Canada Revenue Agency (CRA).

Under the legislation, CRA can require considerable documentation to substantiate a claim; in practice, they give new applicants a break but expect them to improve over time. We also mentor our clients in growing their SR&ED competency through appropriate project planning, documentation and resource tracking. Through our partner, PhaseTracker, we provide software that supports R&D processes and simplifies SR&ED documentation and claim preparation.

 

Technology Strategy

24C team members have many years’ experience planning and executing software product lifecycles. Combining this with research experience and a deep understanding of computer technology, we have learned how to envision, craft and implement business-specific technology strategies.

An effective strategy is visionary yet practical. Consulting with stakeholders in Marketing, R&D and Finance, we develop a shared understanding of the market and the Company’s unique insights into it. If the Company has an invention in place or on the drawing boards, so much the better. From market and invention we derive the Company’s technology value proposition, which the strategy will support and enhance.

We review supporting and competing technologies, to find an edge the Company can exploit for competitive advantage. We envision how the Company could extend that edge now, next year, and for years to come. “How” includes research on underlying technologies, new product development, building core R&D competencies within the Company, financing the R&D, and protecting intellectual property.

The technology strategy document includes a motivating story, vision and mission statements, review of facts and forecasts, proposed technology descriptions, and action plan with resource requirements.

 

Analysis and Design

24C practiced agile development years before XP and Agile were popularized. All 24C designers / developers were trained in object-oriented programming. 24C has worked on both back-end and user-facing systems.

The 24C approach to software design is to understand the problem outside-in and then inside-out: that is, first get the big picture in terms of business and user requirements and an existing technology base; then drill down to objects and functions; and then reinterpret those objects and functions through analysis, prototyping and user feedback, to identify design patterns, metaphors and abstractions, yielding a simpler, more general and adaptable design.

To ensure all stakeholders’ requirements and ideas are heard, we spend time living in their environment, talking to them over coffee, lunch and in small group meetings. We involve them in co-creating presentations and prototypes.

On the formal side, our preferred approach is to identify domain knowledge in the form of an ontology, from which we derive system logic as processes and rules. Implementing functionality in terms of rules tends to flatten and simplify system architecture and allows for adding or modifying functionality and business logic without requiring code design changes. It also supports more flexible user interfaces, especially when combined with the model-view-controller design pattern.

 

Intellectual Property Protection

In the hyper-evolving world of software, patents may not seem worthwhile — until a competitor hits you with an infringement claim. At 24C, we understand the value of patents as trading cards, and as an investment confidence-builder.

24C team members have co-authored U.S. patent applications for Apple Computer, Differential (Valicert) and Preo Software. We have also helped our clients find the holes in competitors’ patent claims.

  
Copyright © 2010 by 24C Group Inc.