Receive Your Full SR&ED Tax Credit Every Time

Don’t Miss Out Because of Inadequate Supporting Information

Your company solves problems, investigates solutions, and designs innovative ways to overcome challenges.  Your work meets all the mandatory requirements for the Canadian Federal Government’s Scientific Research and Experimental Development (SR&ED) program, but your SR&ED tax credit to recover 35% of your research costs was significantly lower than your application.  How could this happen?

The most challenging aspect of the SR&ED application is the collection of the supporting documentation (e.g., status reports, project schedules, and developer timesheets) necessary to demonstrate and verify all of your eligible SR&ED work.  Long after a project is completed, it may be nearly impossible to recover every detail – and those missing details can mean the difference between a full tax credit and one that has been substantially reduced.  Having an effective Project Management system in place can help your company integrate SR&ED tracking with the way you work, so you can maximize your SR&ED Tax Credit every time.

There are four main challenges to preparing a successful SR&ED claim:

• Too much time can be spent gathering supporting documentation and untangling project complexities after the project is completed, when you are trying to prepare the SR&ED claim.
• Firms are often unprepared for audits from the Canadian Revenue Agency (CRA), and then take up substantial resources to prepare and respond to CRA’s questions.
• Project substantiation may not be accepted. There may be no clear link between the advancements, activities and expenditures.
• Claims may be significantly reduced.

Your company can overcome all of these challenges, as long as you have the right elements in place.  Working with a Project Management consultant who is also a SR&ED expert can help ensure every detail of SR&ED qualifying work is being accurately documented for next year’s claim.  Having a good Project Management system will integrate SR&ED documentation and tracking into the project’s full lifecycle, so qualifying development work can be quickly identified and substantiated when it is time to file a claim.    In addition, an effective Project Management system prepares your company for a potential SR&ED claim audit and helps reduce the chances of having an audit in the first place.

The Benefits of using a Project Management system on SR&ED Projects:

• The cost of filing a SR&ED claim is minimized by reducing the amount of time spent unraveling project complexities – a Project Management system makes it quick and easy.
• In the case of an audit, the time required to prepare and respond to CRA’s questions is significantly reduced because there is accurate and complete supporting documentation for the SR&ED submission.
• Project substantiation is rarely rejected because information is complete, organized and understandable.
• Tax refunds are maximized because every SR&ED qualifying work hour is accounted for.

Recently the Canada Revenue Agency (CRA) made the requirements for project documentation even more onerous in the new T661 SR&ED application form. Avoid CRA reductions to this year’s R&D credit by engaging an expert SR&ED Project Management Consultant today.   Or go one step further and implement a PM system to control project costs, improve management visibility and increase your level of project success, while improving your SR&ED processes.  Together, these two strategies form a winning combination that will benefit your company year after year.

Greg Doucette H.B.A.