Last week, the nation's Science, Technology and Innovation Council (STIC) released a formal analysis of the state of innovation in Canada. The report offers an examination of trends in Canadian innovation, productivity and R&D, as well as a review of performance indicators in related areas. Like the council's 2008 report, the current version confirms that the nation continues to lag in several measurable categories. Most notably, STIC reveals that the country has failed to improve or worsened in 18 of 24 set benchmarks and has slipped behind China and Korea in global innovation rankings.

The report, which arrives on the heels of an unflattering review of Canadian innovation by the Conference Board of Canada, has once again provided grounds for a swell of critical media attention. In articles published by The Globe and Mail and The Calgary Herald last week, journalists reacted to the report, placing significant blame for sliding rankings on the SR&ED program.

Without exhausting the argument, it is contended that a large portion of SR&ED tax dollars are being wasted on falsified claims and costly consultants. A transformed and more focused program, it is said, will help ensure that R&D credits land in the right hands. On the contrary, the vast majority of inflated claims and exploitative consulting relationships are the responsibility of a dying breed of SR&ED consulting firms. By selling unattainable promises and excessive fee structures, a few organizations have provided ammunition for media pundits looking to assign blame for lagging innovation statistics.

In reality, it is unrealistic and illogical to use the practices of a few organizations to judge the effectiveness and character of the entire market space. Claimants seeking expert advice at a reasonable cost can engage with a company, like BeneFACT Consulting Group, to assist in the filing of fair and compliant SR&ED claims. By engaging with a reputable firm, claimants can ensure that they access the credits they are entitled to, without sacrificing productivity or claim quality.

For more information on SR&ED services, please email info@benefact.ca or call 1-855-TAX-BACK (829-2225).

July 4, 2011 – Last month, ProfitGuide.com (PROFIT 200) published an article on the Scientific Research & Experimental Development program. Beyond providing a basic outline of program rules and examples of qualifying work, the piece features commentary from several PROFIT 200 member companies and some intriguing analysis.

According to PROFIT, 43% of the companies listed in this year’s PROFIT 200 have received SR&ED tax credits within the last 5 years. Many of the claims, notes the author, have amounted in cash returns of more than $100,000. Received credits can act as a tremendous source of funding for SME’s and according to PROFIT, SR&ED refunds are often overlooked as a viable source of working capital. In fact, in the article Credit Crisis: Escape the Cash Crunch, PROFIT ranks SR&ED credits among their top six alternatives to bank financing.

The article also addresses a series of “procedures” for ensuring a maximized and compliant claim. Using feedback and commentary gathered from PROFIT 200 claimants, the article formulates a strong argument for the use of qualified consultants, the preservation of proper documentation and the intelligent reinvestment of collected credits.

Given the opportunity for valuable funding, the author concludes that middling program participation can be blamed on misinformation and a narrow understanding of qualifying work. BeneFACT Consulting Group recommends that prospective claimants take a SR&ED eligibility test to help better understand their claiming opportunities.

For further analysis of the PROFIT 200 SR&ED article, please feel free to contact us. The original article can be found at www.profitguide.com or by clicking here.

For more information on SR&ED services, please email info@benefact.ca or call 1-855-TAX-BACK (829-2225).

This article was originally published on June 2, 2011 by thebluntbeancounter.com.
The SR&ED program is among the most generous R&D tax incentives in the world, paying in excess of $4 Billion (CDN) to more than 20,000 eligible claimants every year. Based on program criteria, participants can receive significant cash refunds or tax credits to offset a portion of qualified projects. Eligible expenditures include salaries and wages, parts and materials, subcontracts and capital expenditures. In most cases, SR&ED tax credits are fully refundable for small and mid-sized businesses, even if no taxable income is present.

While the program is generous in its application, claimants often struggle with qualification criteria and face a litany of program misconceptions. In dealing with prospective SR&ED participants we regularly encounter intelligent professionals that are utterly baffled by the program. The good news -- nearly all of the collective confusion is based on inaccurate information and a widespread lack of awareness. Businesses that take steps to educate themselves and clarify their eligibility are typically pleasantly surprised by the outcome.

According to CRA’s own statistics, only 25% -33% of SR&ED eligible businesses actually file claims. These estimates, among many things, provide strong evidence that a large segment of eligible Canadian businesses are missing the boat. With overwhelming advantages for claimants (see Mark’s blog of Tuesday), why is the program underutilized? What are the factors that prevent program participation?

In our experience, there are a few recurrent “confusion points” that continue to stand out.

Do we really conduct SR&ED?

Businesses have a difficult time determining whether they actually carry-out SR&ED eligible activities. Without dedicated R&D facilities or labs devoted to research, businesses falsely assume they cannot apply for SR&ED credits. Potential claimants should instead consider time and cost overruns, difficult one-off jobs, recalls or onsite trouble-shooting as strong indicators of qualifying work.

Our work is “not new”

For work to be considered SR&ED eligible, claimed projects do not have to be “new” to their relative industry. If the underlying technology is not accessible in the public domain and is new to the claimant’s organization, grounds for eligibility exist. Most notably, commercial success or failure is irrelevant so long as technological knowledge is gained. Incremental changes to existing products, methods or processes (regardless of the outcome) can be typically considered SR&ED eligible.

We have $0 in taxable income

Potential claimants often assume that losses preclude them from program participation. This is a myth. For most (small and mid-sized) organizations without taxable income, SR&ED credits are fully or partially refundable.

Outside of the three scenarios listed above, there are also numerous businesses that disqualify their own eligibility based entirely on industry identification. Although some are correct in their assumptions, it is prudent for businesses to fully investigate their eligibility. To support this, below are few interesting examples of often ignored SR&ED eligible work.

Occupational Therapy

While it is recognized by the CRA as an eligible field of science, the SR&ED program remains almost totally ignored by occupational therapy practices. Despite this, opportunities are found (especially in larger practices) where new test protocols, outcome measures and treatment techniques are being developed. Examples include, but are not limited to: Speech-Language Pathology, Orthopaedic Services, Maxilo-Facial Surgery, Audiology and various forms of Physical Rehabilitation.

Insurance industry & Financial Services

Outside of claimed IT projects; SR&ED is typically overlooked within insurance and financial services firms. Potential claimants in this area should also consider efforts in actuarial and mathematical modelling. The development of predictive algorithms or data correlation (through statistical modelling) can be leveraged into a SR&ED claim.

Construction & Civil Engineering

Construction and civil engineering businesses traditionally undervalue their eligibility and often go without filing claims. Most firms in this field incorrectly discount their development efforts due to the fact that a majority of their projects are regulated by “code”. In reality, exceptional value exists in work related to the use of new materials and the creation of more efficient processes. Environmental factors and site- specific conditions, as an example, introduce the type of technological obstacles that can form the base of a strong SR&ED claim.

For more information on SR&ED services, please email info@benefact.ca or call 1-855-TAX-BACK (829-2225).

Source: http://www.thebluntbeancounter.com/2011/06/sr-misconceptions-what-most-businesses.html

Earlier this year, as part of their Annual Report to Parliament, the CRA issued a table documenting their success rate(s) and average processing times for SR&ED claims. You can view the chart by visiting the CRA’s website. These results, in part, are driven by the CRA’s ongoing commitment to defined and consistent standards for administering the SR&ED program.

What are the current CRA claim processing standards?

•	Refundable claims will be processed within 120 calendar days of receipt of a complete claim
•	Non-refundable claims will be processed within 365 calendar days of receipt of a complete claim
•	Claimant-requested adjustments to refundable claims will be processed within 240 calendar days of receipt of a complete claim
•	Claimant-requested adjustments to non-refundable claims will be processed within 365 calendar days of receipt of a complete claim

According to the CRA, what can threaten these standards?

•	Filing an incomplete SR&ED claim or not filing at the appropriate tax centre
•	Failing to file your SR&ED claim with your income tax return
•	Neglecting response to a CRA proposal letter or failure to act upon CRA information requests
•	Failing to successfully schedule required meetings with the CRA
•	Incomplete reviews from previous fiscal years that delay the review of your current claim
•	Modifying your claim during a review or requesting that your review be delayed

 

Reminder: 18 Month Deadline Approaching

Is your fiscal year end December 31? If so, June 30, 2011 marks the 18-month deadline for filing your 2009 SR&ED projects. To avoid missing out on this opportunity, we recommend that you contact us today for an expert assessment of your eligible expenses.

For more information on SR&ED services, please email info@benefact.ca or call 1-855-TAX-BACK (829-2225).

As forecasted in our October 2010 update, revisions to Form T661 and T4088 (Guide to Form T661) have been formally announced. These revisions have come in response to feedback gathered by the CRA through consultations with SR&ED claimants and stakeholders across the nation. While the majority of the reported changes are relatively minor in nature, claimants should take time to fully understand the revisions to the preamble and to the description of line 242.

As promised, below is a functional summary of the changes to Form T661 outlined by the CRA:

•	A new line has been added to the preamble to emphasize that information requested in this form and documents supporting the expenditures claimed are prescribed information.
•	Lead-in for lines 235 to 238 has been revised for clarity.
•	Descriptions for lines 242 to 252 have been revised for clarity.
•	Former Section E in Part 2 has been removed.
•	A new part (Part 6) containing a table has been added for claimants to provide a list of all projects claimed in the tax year including their associated costs.

According to Christina Trozzo, Director, Policy & Strategic Clients, the addition to the preamble is a well-planned move by CRA, allowing them to assert that supporting documents are prescribed. While this has always been an apparent process followed by BeneFACT, it is noteworthy that CRA has adjusted the T661 to account for this. The description of line 242 has reverted back to the definition of an "obstacle/uncertainty" as opposed to only an "obstacle". We believe this minor word addition can have significant impact as CRA appears to be acknowledging that a technological uncertainty is in fact an indicator of SR&ED.

It is also worth noting that the release took place May 3, 2011 with a relatively short implementation period (the current form will not be accepted after July 31, 2011). Another major change is the addition of a new section, Part 6 which consists of a table for information on every project being claimed, not just the 20 largest. For each project, the following information is required:

•	Project title or ID
•	Salary or wages costs for the tax year
•	Cost of materials consumed or transformed in SR&ED
•	Contract expenditures

For more information on the latest revisions, please contact us. We will ensure to keep you posted on further developments as they materialize.

For more information on SR&ED services, please email info@benefact.ca or call 1-855-TAX-BACK (829-2225).

Today, BeneFACT Consulting Group is pleased to announce the launch of its new corporate website and refreshed visual brand. The site features new and practical information related to the SR&ED (Scientific Research & Experimental Development) program and provides a number of useful resources for claimants seeking to develop or expand their knowledge on R&D tax credits.

"Visitors to our site are now able to learn a lot more about how businesses in their particular industry interact with the SR&ED program", says James McDermott, Director of Marketing and Business Development for BeneFACT Consulting Group. "We want to help take the guess work out of the equation and provide a central knowledge-base for potential claimants". In addition to a line of downloadable informational brochures, BeneFACT's new website features a 10-step SR&ED Health Check, new opportunities for potential partners and a revised SR&ED FAQ section.

With the launch of the new brand and website, also comes the release of SATS^®, BeneFACT Consulting Group's groundbreaking SR&ED project management software. By centralizing SR&ED documentation, SATS ensures that claimants have instantaneous access to the statistics, documents and evidence they require to support their SR&ED claim. Learn more about SATS.

About BeneFACT Consulting Group
BeneFACT Consulting Group is Canada's largest independent Scientific Research & Experimental Development (SR&ED) consulting firm. BeneFACT utilizes market-leading financial and technical expertise to ensure that companies maximize their SR&ED tax credits. With deep experience in General Manufacturing, Information Technology, Food & Beverage, Chemicals and Oil & Gas, Life Sciences & Biotechnology and other fields, BeneFACT is uniquely positioned to provide risk-free service to businesses seeking SR&ED tax credits.

Contact Information:
BeneFACT Consulting Group Inc.
1-855-TAX-BACK
www.BeneFACT.ca

For more information on SR&ED services, please email info@benefact.ca or call 1-855-TAX-BACK (829-2225).

Recently it was announced that the Harper government will be taking steps to reevaluate its support for industrial research and development in Canada. In a published statement issued on October 14, 2010 by the office of the Minister of State for Science and Technology (the Honourable Gary Goodyear) it was revealed that an "expert panel" will soon be launched to explore new ways to support R&D across the nation.

As previously reported, Canadian innovation has received poor reviews from industry groups, including a failing grade from The Conference Board of Canada. The Board ranked Canada 14th out of 17 economically developed nations, citing Canada's inability to commercialize on cutting edge research and innovation. Despite this, national scientific research continues to flourish. The Federal government annually distributes $3 Billion (CDN) in SR&ED credits and eligible businesses remain committed to taking advantage of the tax incentives available to them.

It is widely speculated that the upcoming review will question the imbalance between government spending and the commercialization of Canadian-born scientific research and innovation. Early speculation suggests that the panel will review ways to improve commercialization without altering government funding for R&D.

BeneFACT will continue to track changes and announcements as the official review begins. We promise to keep you in the loop as the story progresses. If you have any questions about the purported amendments to the SR&ED program, contact us at any time.

For more information on SR&ED services, please email info@benefact.ca or call 1-855-TAX-BACK (829-2225).

The Canada Revenue Agency (CRA) has carried out cross-country consultations collecting feedback from SR&ED stakeholders regarding the November 2008 changes made to Form T661 and T4088 (Guide to Form T661). Through a post on their website, the CRA has indicated that revisions to the Form and Guide can be expected in April 2011.

The CRA has revealed that Part 2 of Form T661 will be revised to contain a table that will provide claimants an area to list costs associated to all of their projects and allow them to submit project descriptions for only the 20 largest (measured by dollar value) projects. The inclusion of the table, the CRA reminds, does not abandon the need for completing Part 2 of Form T661 in its entirety. Claimants that fail to record all projects will be subject to "...the disallowance of the expenditures claimed for the project as SR&ED expenditures" if the description is not made available upon CRA request.

For further information on how the approaching changes to Form T661 will affect your claim, we encourage you to get in touch with BeneFACT's team of SR&ED experts. Visit http://benefact.ca/contact.html and let us know how we can help.

For more information on SR&ED services, please email info@benefact.ca or call 1-855-TAX-BACK (829-2225).