One of the biggest (and most costly) mistakes a company can make in regards to Scientific Research and Experimental Development tax claims is to attempt to go it alone. As much as the SR&ED program was implemented to reward Canadian companies to expand on their innovative activities, the filing process itself is intimidating and complex. Yet many companies attempt to take on the challenge of a mountain of paperwork and the looming threat of a possible audit, all to save a minimal amount that would go toward hiring a professional. But in the long run, is it really worth it?
Think filing your regular taxes is a headache? It doesn’t come close to the paperwork required for filing for Scientific Research & Experimental Development tax credits. It’s imperative to keep detailed accounts of ALL activities surrounding innovation practices, especially in case of an audit.
Audits aren’t guarenteed when filing for SR&ED, but they do occur, and if all the proverbial ducks aren’t in a row, it can be an extremely frustrating and unpleasant experience. Even if paperwork is properly organized, the trouble may occur in the writing of the actual report. There are complex rules to follow and if the writer is not an expert in SR&ED, they may overlook or not fully understand every aspect of the report, resulting in delayed or lost benefits.
Is It or Isn’t It?
One of the major areas where businesses are missing out on possible SR&ED tax benefits is in the everyday occurrences. Daily activities and even failures may be SR&ED eligible. The activities you do day in & day out can’t be put toward the claim, can they? In some cases, these activities can indeed count. Sometimes it takes an individual on the outside of the business looking in to truly see what activities are eligible.
Failure is a Scary Word
No one likes to fail, and when a project doesn’t work out the way it was intended it can be easier to chalk it up to an “experiment” and let it go. But there’s that word: Experiment. In the SR&ED world, it’s all about the attempt at innovation in Canada. It’s trying something new and pushing forward. And the rewards are there, even if the project didn’t work out in the end. However, you still have to figure out what part of the loss is SR&ED eligible.
The bottom line is this: Sure, you can file for SR&ED yourself, but can you really afford it? Are you willing to have big payouts overlooked and miss possible benefits you’re actually entitled to? And besides, you have better things to do – like running your business.
Make sure no stone is unturned in your hunt for SR&ED eligible activities. Contact a BeneFACT Consultant today to help maximize your SR&ED tax benefit.