Tag Archives: CRA SR&ED claim review

CRA Reviews on the Increase | SRED Advice from the Experts

The Biggest Rise in CRA Reviews

sred advice from sred experts edmonton vancouver torontoFor the past 5 years the CRA has been increasingly reviewing Scientific Research & Experimental Development (SR&ED) submissions – but 2013 may have shown the biggest rise of all.  It’s important for your organization to get SRED advice as the federal tax incentive, known as SRED, doles out an impressive $4 billion annually and is the largest form of Federal support for industrial research and development, especially for innovative SMEs.

Our SRED consultants are hearing from companies who in the past have received their refunds without challenge and are now experiencing delays and even reductions in their claim amounts.

Why are these changes happening and what actions can your organization take to address this threat?

Why are more CRA reviews of SRED claims occurring?

The Government of Canada is attempting to make the SRED program more efficient and targeted.  It wants to see SRED dollars hitting the mission of the program – to advance Canada’s advancement of technology.

The CRA’s recent policy changes and increase in SRED staffing have been identified as the main reasons for the sharp increase in disputed SR&ED submissions. What this means practically is that more focus is being given to the claims process and there is an increasing need to understand and follow the purpose and intent of the program.

SRED advice for your organization about increasing SRED reviews

With increased scrutiny on SRED claims, it’s more important than ever to utilize the services of a professional SR&ED consulting services firm.  Experts who specialize in SR&ED claims have years of experience in identifying eligible costs, stay on top of changes in SRED policy and have a working knowledge of the CRA’s requirements and review process.

Proper project identification

A great deal of company resources can be wasted by documenting projects that turn out to be in-eligible for SRED.  It makes sense to employ an expert to help you scope out new projects and determine what projects or parts of projects would be eligible.

Set up your organization for SRED documentation

Once you’ve identified whole or parts of projects that are SRED eligible, it is important to set up a documentation system at the outset of a project, not afterwards.  It’s also important to document the correct information.  The CRA is looking for documentation that proves a systematic exploration of a hypothesis and clearly shows the steps taken and the reasoning behind them.

It’s just as easy to over-document as it is to under-document your SRED projects and this can waste employee resources and undermine the sustainability of future SRED projects.

Some extra discipline and diligence are needed for time-tracking of employee contributions to the project as well as expenses related to the project.  These expenses are best proven when tracked at the time of the project and with proper set-up can be captured efficiently.

SRED Consulting Services

At Enhanced Capital Recovery we’re helping our clients avoid reviews by preparing SRED claims in precise accord with the CRA’s most up to date policies and procedures.  If reviews do occur, we’re there to support clients during a review.  We also help clients who prepare their own SRED claims by providing a third party review or helping to defend a claim.

Get Help

If your SRED claim is under review or you want to capitalize on a claim either now or in the future, contact us to find out how we can help.  We’re happy to provide more information through a free consultation.








 

 

SR&ED Claim Review? What to Expect from the CRA

What is the SR&ED Claim Review Process?SR&ED claim review CRA audit

The Scientific Research and Experimental Development (SR&ED) claim review is a process involving many steps and individuals. But what exactly happens at the Canada Revenue Agency (CRA) once your claim is filed? Here is what you can expect during the review process.

Determining if you qualify

The CRA’s first step is determining whether your company and projects meet the basic criteria. Are you a Canadian Controlled Private Corporations (CCPC)? Is your T661 form completed correctly? Has your company attempted to overcome a technological uncertainty? Have you used research and development (R&D) to advance technology?

This is also the stage where a CRA financial reviewer inspects whether the expenses you outline in your claim are eligible costs for SR&ED program funding.

Technical aspect review

Once the basic requirements have been determined, the CRA science advisor—sometimes with the assistance of an outside industry expert—further inspects the technical aspects of your claim.

This involves the review team analysing whether your project employed R&D to solve a technological or scientific problem. It will also investigate how you measured the success of your project, and to ensure the knowledge gained was innovative to your company.

Request for information

In some cases, the CRA review team will request additional information. This can provide further evidence to support your claim or to answer questions for clarification. Should this be necessary, you will be contacted by a science advisor with a specific request.

An outside consultant may also be contracted during this stage to clarify information for the review team. The CRA is familiar with all consultants and confidentiality is ensured in every claim.

Site visit or interview

The CRA may request an interview or site visit when verbal clarification or additional documentation is insufficient. During an interview, the science advisor, possibly accompanied by a consultant, will identify the areas of your claim that are unclear.

The interview may also be to determine whether the projects were sufficiently documented and that costs were spent as claimed. For this reason it is essential to document and organize evidence of your claim.

Enhanced Capital Recovery can ease the process

Allowing a tax consultant like Enhanced Capital Recovery to take care of your SR&ED claim can ease the review process and even reduce the waiting period.

An accurate claim, complete with industry-specific information, will leave the CRA with less reason to request information or site visits for clarification. Our consultants are knowledgeable with the entire review process and could identify additional qualifying projects.

To find out how we can provide efficient assistance in submitting your claim, contact ECR today for a free consultation by phone at 1-800-470-0235 or email us at info@enhancedcapitalrecovery.com.  We look forward to hearing from you.