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Blog
Quick Guide to SR&ED Deadlines & Reviews
Navigating Scientific Research and Experimental Development (SR&ED) Tax Credit deadlines and reviews can be complex, but with proper planning, you can simplify the process. In this quick guide, we’ll explore SR&ED filing deadlines, outline ABGi Canada’s streamlined five-stage process for filing claims, and offer insights into CRA reviews.
SR&ED Planning
ABGi Canada has outlined how our senior team of technical and financial experts work with you to find the maximum amount of credit while minimizing your time investment. Our 5 stage process makes filing an SR&ED Tax Credit Claim simple and easy.
While SR&ED Tax Credit claims can be filed within 18 months (amended filing) for corporations from the end of a taxation year, ABGi Canada recommends aiming to complete the claim over the course of 6 months (original filing) in real-time to avoid last-minute information gathering and submission. This will allow dividing the process into a number of stages to collect and process the information in a timely manner.
Stage One: Reviewing active projects and existing processes
Our first step is to make sure your team has a solid understanding of CRA’s guidelines and to ensure that we have a solid understanding of your organization and internal processes. This involves a detailed presentation to your technical and finance leads on the SR&ED Tax Credit guidelines/legislation as well as reviewing your existing processes, organizational tools, project lists, and tracking systems. From this information and discussion, we review potential R&D projects to narrow the list to those that are likely to qualify as well as determine the most suitable method of gathering the necessary technical and financial information.
Stage Two: Gathering information for technical reports throughout the year
Next, we work with you to develop a plan to capture the information necessary to support your claim from a technical perspective. Our technical team will recommend the best methodologies to capture internal technical information if none is available or suggest ways to enhance the current process. Based on discussions with your technical, we obtain the information necessary to write a technical report for each project that describes the work performed and why it is eligible.
Stage Three: Project costing
Subsequently, we work with your financial leads to capture the information necessary to support your claim from a financial perspective. This involves a detailed discussion with the finance lead to develop a plan to obtain the financial information. We compile costing / financial information based on the selected R&D activities/projects in an itemized report to showcase eligible costs per project.
Stage Four: Review of information before submission and submission date
Once the information for both the technical and financial reports have been compiled they must be reviewed for accuracy. We recommend peer-reviewing the technical and costing reports by another internal technical and tax consultant. Once the peer review is complete, ABGi Canada will review the reports and flag any gaps if necessary to ensure the claim adheres to the latest CRA’s requirements. The submission of the SR&ED tax credit figure is then completed by you or your tax agents.
Stage Five: CRA screening / possible CRA audits
With CRA audits on increase, it is very important that companies allow sufficient time for their SR&ED consultants to analyze and process the information in order to ensure that the projects are in line with the CRA’s latest guidelines. Claims can be screened by the CRA at the first instance, enquiring for the technical and costing reports. ABGi Canada is responsible to provide CRA with the reports. Some claims may be audited further and an onsite visit from CRA’s inspectors are expected. ABGi Canada provides support throughout the audits and will help our clients defend their claim.
ABGi Canada can assist you in obtaining tax credits for scientific research and experimental development activities. Whether your work involves basic research, applied research, or experimental development, ABGi Canada can take the uncertainty out of the filing process and get you the credit you deserve for your innovation.
Once an SR&ED claim has been submitted to CRA, the claim will be either approved or selected for a review. In this section, we will explain the differences between the FTCAS, CAS, Financial and Technical Review as well as an Audit.
FTCAS (First-time claimant advisory service)
All companies filing for the SR&ED Tax Credit for the first time in Canada will be subject to the FTCAS. If anyone informs you that this can be skipped or you will not be selected for the FTCAS is incorrect, as CRA is doing their due diligence.
The FTCAS is a review conducted by a technical reviewer as well as a financial reviewer from CRA. The goal of both reviewers is to educate the company on the SR&ED Tax Credit. Once completed, both reviewers will ask some questions about the SR&ED claim submitted by the company. ABGI Canada will be in attendance for the FTCAS, but the reviewers only want to hear from the company that submitted the claim. Once the FTCAS is completed, the reviewers may provide some important notes on how to improve the claim for next year. The claim is now approved by CRA, and your refund will be sent in four to six weeks.
CAS (Claim advisory service)
Similar to an FTCAS, a CAS review is for companies that have not claimed an SR&ED Tax Credit in a minimum of three years. Companies also affected are long-standing SR&ED filers that CRA has not spoken to in 3-5 years. In both instances, a CCPC and a non-CCPC can be selected, CRA does not favour one over the other. CRA is doing its due diligence to determine if the company is still aware of the SR&ED Tax Credit.
The review will be conducted by both a technical reviewer and a financial reviewer. An education portion will take place along with questions about the SR&ED claim submitted. Once the meeting is over, important notes if any on how to improve the claim will be provided to the company. A refund on your approved SR&ED claim will be sent in four to six weeks.
Financial Review
From time to time, CRA may select your SR&ED claim for a financial review. This may be triggered by a double or triple in the claim size from the previous year, additional grants or funding may have been used by the company or an increase in SR&ED time allocated to projects (these are but a few examples).
CRA will be specific in the review letter they send to the company. Sometimes, they may ask for the information beforehand and if everything is answered to the financial reviewers’ liking, the claim will be approved without having to have a meeting. If the financial reviewer is not satisfied with the given financial material for the SR&ED claim, the review will take place.
During the review, if the financial reviewer is still not comfortable with the provided information, this can trigger an audit where a technical reviewer will now be assigned to the case.
Technical Review
From time to time, CRA may select your SR&ED claim for a technical review. The financials are strong but CRA is not too sure your SR&ED projects are deemed a scientific advancement (basic research, applied research, and/or experimental development).
Just like the financial review, the technical reviewer will provide a detailed letter outlining what is required from the company. If the information sent to the client is satisfactory to the technical reviewer, the claim will be approved. If not, a review date will be decided to explain further the SR&ED project(s) submitted.
When the review is conducted, the technical reviewer just like the financial reviewer may decide what is presented is not SR&ED eligible and a full audit will be determined bringing in a financial reviewer.
Audit
When a company is selected for an SR&ED audit, CRA will provide a detailed letter on the project(s) that are in question as well as any financial issues.
An audit may be triggered by the following points:
Audits usually take half a day to a day for all questions by the two reviewers to be answered. The turnaround may not be as fast as an FTCAS or a CAS as those are more on educating the company. Once the meeting is over, the reviewers may come back and ask additional questions. After the whole process is completed, the claim can be deemed 100% eligible, a portion of the claim can be cut, or the entire claim is ineligible and will be denied.
Our engagement process involves a number of steps, the most important being the identification of SR&ED projects occurring within an organization. With our strong technical base, ABGi Canada has the ability to predict on a very accurate basis, the likelihood of whether a project qualifies for SR&ED tax credits.
ABGi Canada offers a free consult to all of our potential clients on the R&D Tax Credit. We will determine along with the client the eligibility of filing a claim to CRA.
ABGi Canada tailors our service offers around the needs of our clients. We do not get paid until our clients are paid by CRA.
ABGi Canada will lay out the ground work for the R&D claim. Our goal is to file each and every claim in a timely manner.
Technical drafts are created by our team of in-house scientists, engineers and developers. Each client is assigned a specialist specific to their industry.
ABGi Canada’s in-house CRA friendly costing templates make it easy for clients to track expenditures.
All technical write-ups and costing reports are sent to the client before submitting for approval.
