Familiar with the program
If you’re familiar with the SR&ED Program, chances are you have an opinion already. Many companies have had good experiences, or bad experiences, or both at various times in the past.
Some facts that you might not know:
- This program has been around since the 80s
- SR&ED was overhauled in the 90s, “Experimental Development” was added to the policy, allowing for broad application in many technologically oriented corporations
- SR&ED is by far the largest and most important tax incentive program in Canada
- There is no budget for the program. The amount of benefit provided to Canadian corporations depends purely on the number of applications received, and the dollar amounts approved according to eligibility
- The value of SR&ED has fluctuated between 4 Billion and 2.8 Billion per year, between 2009 and 2015.
- If your claims have been accepted as filed, that doesn’t mean your work was eligible. It just wasn’t selected for review.
- If your work was approved in one year, it doesn’t guarantee that your work will approved in a following year
- Different technical reviewers may arrive at different opinions of your work
What you do need to know:
- The SR&ED program is definitely more strict in this decade than it was in the prior decade. Even eligible work is often denied if contemporaneous evidence is unsatisfactory.
- In the worst case scenario, CRA employs many specialized tactics that can be used against claimants. In the best case scenario, CRA may arrive as a mere skeptic. If selected for review, you should definitely seek out professional expert assistance.
- CRA has implemented the “Five Questions” and you must be prepared to answer these fundamental questions during any audit.
- The SR&ED program is highly oriented towards the scientific method, and not necessarily a reflection of “innovation”.