Posted November 30, 2015 by john
You can and should still claim for SR&ED if you received other forms of government assistance. A SR&ED project accumulates eligible SR&ED expenditures, and when you claim SR&ED you receive a percentage of these expenditures as a tax credit or refund. These expenditures include wages and some types of materials and contracts. The SR&ED expenditure pool is simply reduced by the government assistance that is related to the SR&ED work, before the credit or refund is calculated.
It is worth claiming the SR&ED because the government assistance usually does not cover all the costs, and only the assistance related to the particular project’s SR&ED activities must be considered. Plus, SR&ED gives you a 55% overhead allocation based on the claimed labour. So even if the other government assistance covered all the SR&ED labour costs, you still get a SR&ED benefit based on the 55% overhead amount.
Additionally the plans, reports and tracking that may have been required to acquire the other assistance makes preparing the SR&ED claim a quick and efficient process.
Posted October 21, 2015 by john
In recent years CRA has placed more emphasis on the Technological Advancements and related Uncertainties. Although we have adapted to CRA’s new requirements, many claimants are still using the old criteria when preparing claims. Too many people focus their SR&ED claim around their product or equipment development. There is often an insufficient description of how this work meets the SR&ED criteria. It is important to describe the underlying technology, and how an advancement was made to that technology by overcoming problems (uncertainties in CRA’s lingo).
It’s not about products or processes, and it’s not what you’ve done with the existing technology. It’s about what you’ve done to further develop the underlying technology.
Many companies do not understand CRA’s new language. As a result, they think they no longer qualify. However, our consultants can interview your technical staff and successfully present your work in a manner consistent with the new CRA requirements.
Posted September 21, 2015 by john
Many businesses believe they do not have enough documentation to file a claim. However, most of the time there is sufficient evidence to justify submitting a claim. It’s very likely there are some dated purchase orders, or dated contracts with customers to prove when the work occurred. We encourage our clients to setup an “SR&ED internal mailbox”. That way, during the year anyone can cc: this “SR&ED mailbox” which will record the SR&ED technical issue, along with a date stamp. Timesheets, samples, sketches or journals are also helpful to round out the story.
In the absence of documentation, you can make reasonable estimates based on the available evidence. From our experience, in the event of an on-site CRA review of the SR&ED claim, their primary objective is to verify that the work occurred and the expense claimed are reasonable. When explaining the claim to CRA, when the documentation can’t prove everything, a logical and reasonable rational for estimates is usually acceptable. Also, CRA likes to see that new claimants are on the road to compliance. We can help you implement a simple SR&ED tracking system, or help you tweak your existing system.