The Scientific Research & Experimental Development (SR&ED) program is the largest tax incentive federal program, administered by the Canada Revenue Agency (CRA). It encourages Canadian business of all sizes and in virtually all sectors to conduct Research and Development (R&D) in Canada. Each year, the SR&ED program provides over $3.6 billion in Investment Tax Credits (ITCs) to over 23,000 claimants across Canada. Of these, approximately 75% are small businesses. So despite these well-established facts, why is it getting tougher for firms to claim SR&ED funding?
In the past, especially before the Jenkins report was published in 2012, it was easier to apply for SR&ED funding. The eligibility rules were not as stringent and the definition of Technological Advancement was loosely used. As a result, there were many consultants taking advantage to assist their clients with this program. The CRA, based on the loosely defined eligibility criteria, was generous in assessing the tens of thousands of claims that would come to their desks each year. As a result, more and more firms began to take advantage of this program and even those that were on the border line of SR&ED eligibility. With the recent changes to the program, additional hiring of CRA employees to oversee the SR&ED program, and the tightening of the eligibility criteria, it has become harder for firms to claim for SR&ED funding. Whereas many firms in the past had their SR&ED claims accepted as filed, these same firms are under major scrutiny. And this is the result of redefining the eligibility criteria by the CRA to overhaul this existing program and to remove those claimants that are outside the jurisdiction of the SR&ED program.
The increase in reviews will continue to dominate the Canadian SR&ED landscape. Nonetheless, at BeneFACT we are experiencing successful reviews and the reasons for this are:
- We are ISO 9001:2008 registered, which means we are process driven and have systems in place to counteract the threat of any reviews.
- We work with our clients long before the presence of a review to assist them with gathering of important documentation, lab reports, prototypes, photographs, etc to ensure that all SR&ED projects are well supported.
- We have a dedicated reviews team, who are experts in the field. We provide a mock review with the client, before the actual review, to ensure that our client is fully prepared to handle all questions posed by the CRA.
- We meet with CRA SR&ED directors from different markets to go over policies and procedures.
If you feel overwhelmed with your current claim or need a second opinion to assess your claim, please contact one of BeneFACT’s highly trained SR&ED experts to assist you. Speak with a BeneFACT SR&ED expert today to learn more about the SR&ED program to see if your company’s activities qualify for this lucrative tax credit. Get the information you need to start maximizing your claim today! Toll Free: 1-855-TAX-BACK (829-2225)