The number one piece of advice we give to our clients with respect to the Scientific Research and Experimental Development (SR&ED) program is to treat the Canada Revenue Agency (CRA) as a Customer. The reason for this is quite simple: Return on Investment. At the end of the year, the CRA will provide your company a return on your qualifying R&D investments through the SR&ED program. To get your return, you must undertake eligible activities, provide certain deliverables (i.e. T661) and maintain appropriate records. This is not unlike the activities an organization would undertake when completing work for a ‘regular’ client. As in any other case, your return greatly depends on the customer satisfaction. One area where this philosophy particularly applies is maintaining quality supporting documentation for your SR&ED activities. In the T4088-08e (Guide to the T661), the CRA states that contemporaneous documentation is the “best supporting evidence that you […]
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It is common knowledge that a company has 18 months following their fiscal year end to submit a claim for SR&ED Investment Tax Credits (ITC). The claim can be submitted concurrently with a T2 or filed later as an amendment. However, the time you will wait before receiving your SR&ED ITC or cash depends on three factors: (a) how the SR&ED claim is submitted, (b) when it is submitted, and (c) whether the claim triggers a review. When a SR&ED claim is submitted as an amendment, the CRA will typically review it within 8 months following submission. If a SR&ED claim is filed concurrently with your annual tax return, the CRA will usually process the claim within 3 months following submission. Provided your SR&ED claim doesn’t trigger a CRA review or an audit, your refund will be on the way shortly after the claim is processed. It is also not […]
On February 6, 2011, the Globe and Mail published an article entitled, “Dubious claims diminish R&D tax credit”. As is evident form its title, the article talks about abuse of SR&ED program and calls for action. In particular, the author, points to a “flood of dubious claims” that “is bogging down an already complex and unpredictable application process.” Unfortunately, the abuse of the program is a sad reality. We have seen it both from a consultant as well as from a claimant side. The CRA is acknowledging the problem and is contemplating various measures to counter them. The SR&ED program is fundamental to keeping highly skilled technologists in Canada, and it would be a grave political mistake to scrap it. Therefore the CRA’s response to the problem will likely come in a form of further enforcing compliance aspects of the program and subjecting more SR&ED claims to greater scrutiny. It […]