Author: Bikram Johal, President of Banhall Consulting ltd.
So, you have been looking into the SR&ED program and have decided to file a claim. The next part is to understand the different steps needed for your claim. Having a clear understanding will help ensure that your claim is filed correctly. Any mistakes could lead to an audit or a denied claim altogether.
The SR&ED filing process can be broken down into three phases:
- A SR&ED evaluation
- The technical and financial document preparation
- The official filing with CRA
SR&ED Evaluation
The first step is to have a preliminary SR&ED evaluation. This is where you can engage a consultant to help analyze and assess how many SR&ED projects you have and what activities are eligible. The key aspect here is to identify all areas that appear to qualify for SR&ED. Once you determine what qualifies, you can now start developing an estimate of your claim’s value based on the expenses you have incurred.
Document Preparation
Now that you have an idea of the size of your claim, you can focus on the write-up of the technical report. Each report details your R&D project and is where you will present your case of why your project is eligible and thus deserving of a tax refund. The report is for you to elaborate on the challenges you faced in your project, the experiments you tried (including what failed or succeeded), and why your project has advancements in technology. A well-written report is meant to present your R&D using a systematic approach. SR&ED financial forms will need to be prepared that tie actual expenses and time spent on SR&ED activities.
While you are working on your SR&ED claim, records of supporting documentation for each project should be set aside. While this is not required to be submitted with your claim, it is important to keep on hand just in case your claim is audited by the CRA.
Filing Your Claim
The last step is the filing stage, where you (and your SR&ED consultant or accountant) verify the tax forms are in order and ready to go. Your claim can be submitted with the corporate tax return, which can expedite your processing time with CRA. If you have already filed your tax return for that year, you can still apply for SR&ED using an amendment of the filed tax return.
SR&ED claims must be filed in a complete manner within 18 months of the end of the fiscal year. If a claim is submitted, but CRA finds an omission after the 18-month deadline, the claim is still considered incomplete and ineligible for a tax refund. SR&ED claims take time to prepare so it is important to get started as soon as possible.
Previous entry in the SR&ED blog series: How much can I get back from SR&ED and when can I get it?
Next entry in the SR&ED blog series: What is an SR&ED Audit?
About Banhall Consulting
Banhall Consulting LTD. was founded based on our passion for helping Canadian companies get the funding they need for their innovation to grow and thrive. Our dedication is helping companies with the SR&ED tax incentive program and how to navigate the complexities of the process and understand all necessary guidelines. Our team has decades of combined SR&ED experience and has worked on thousands of SR&ED claims. Our financial and technical experts have the versatility to assist companies in various industries in all areas of their SR&ED claim. Combining this experience and knowledge with our detailed-oriented methods has allowed us to achieve proven results with a 96% success rate on SR&ED claims.
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