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Frequently Asked Questions: Do we need detailed information for the SR&ED claim? CRA will allow reasonable claims with less than ideal documentation for the “first time" claimants. Documentation required for a SR&ED claim includes records that separate the costs applicable to SR&ED from other project expenses. The applicable costs include payroll records, materials consumed in the SR&ED project, consultants invoices etc. Project activities can be substantiated by correspondence via e-mail/letters, progress reports, minutes of meetings etc. In many cases (particularly for first time claims) best "guestimates" are acceptable to CRA.
Will our company be audited? There will not be a general audit of your company. CRA’s policy is to review only the expenses on the R&D claim. A financial reviewer will visit you, particularly if this is your first claim, to verify the expenses claimed. The science reviewer may also visit to gather more information or to clarify the technical aspects of the claim.
Why hasn’t our accountant made us aware of the program? Other than large accounting firms, accountants often specialize in corporate tax planning and year end statements. The SR&ED is a highly specialized field. Many accounting firms do not have the resources to dedicate a full time staff to SR&ED claims. This area is so specialized CRA has a team of financial reviewers who deal exclusively with SR&ED claims. In addition, CRA hire industry specialists (many hold PHD and are experts in their field) in various areas of science to review the technical reports.
Unlike an accounting firm that provide tax advice on a variety of tax issues, SR&ED Consultants focus EXCLUSIVELY on SR&ED claims.
What does the SR&ED claim include? An application for a SR&ED refund must include a technical report detailing the development work performed, as well as schedules, which are included with the tax return. The most critical part of the submission is the technical report. Qualifying claims can be rejected simply because of the quality of the technical report. CRA won’t spend time searching for the merits of a project. The technical report must be clearly stated in the original submission or a claim loses its credibility and may be disallowed. How successful are your claims?
What's my next step? SR&ED Consultants will be pleased to meet with you at no cost or obligation. Please contact Itzhak (Isaac) Rosenbaum at (905) 470-8485, (647) 883-8524 or send an e-mail to itzhak@sred-consultants.com
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