In-house | Accounting Firm | Consultant. Who is the best option when filing an SR&ED Tax Credit Claim?

March 15, 2022

While many businesses may be surprised to learn that their work qualifies for Scientific Research and Experimental Development (SR&ED), a potential claimant would greatly benefit from the assistance of an experienced SR&ED claim preparer to maximize their claim value. When considering an SR&ED claim submission, there are three potential routes a business can take, but some of these options have significant drawbacks that can compromise a claim’s value or success.

Preparing In-House
Canada Revenue Agency (CRA) uses stringent guidelines to determine an SR&ED claim’s eligibility, and businesses that perform eligible work typically do not satisfy all the requirements through their day-to-day operations. The initial claim submission comprises of descriptive narratives of the eligible work performed as well as supporting financial information; if any of the technical or financial details is improperly or inadequately presented, an SR&ED claim may be audited by CRA, and the process of defending it can be difficult without professional guidance. Also, preparing an SR&ED claim in-house may appear to be a low-cost option, but in reality, this process can take up a significant amount of time from a company’s regular operations.

Accounting Firm
SR&ED remains a specialized area of taxation in Canada, and thus a thorough understanding of tax law pertaining to SR&ED is critical to successfully prepare a claim and maximize its potential claim value. Many accounting firms lack the expertise and manpower to generate the technical narratives of a claimant’s eligible work; while guidelines from CRA exist, some crucial practices and potential red flags are not explicitly outlined, and these kinds of errors can result in audit reviews. From the financial perspective as well, errors commonly occur from inadequate understanding of SR&ED rules and regulations.

SR&ED Service Provider
A well-established SR&ED service provider such as ABGi Canada knows the ins and outs of preparing an optimized claim. Experienced consultants who specialize in various fields of science or technology can concisely capture and relay claimants’ technological work to CRA. There is a significantly reduced risk of triggering an audit review when the information is first critically analyzed to ensure eligibility is present and problematic terms and phrasing are omitted. Similarly, consultants can guide claimants on what relevant documents to present, as well as what should be produced and preserved for subsequent claims. In the event of SR&ED audits, the team at ABGi Canada will provide the necessary guidance and preparation to ensure the most optimal outcome. We also offer additional services, including the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) and Ontario Interactive Digital Media Tax Credit (OIDMTC); by preparing multiple claims simultaneously, we ensure that a claimant maximizes each claim’s value without double-dipping, as the various programs could conflict with each other if not properly managed.

For more information on technological uncertainties in relation to the SR&ED Tax Credit, NRC IRAP or OIDMTC, please contact us today.