Preparing and Submitting a SR&ED Claim
A SR&ED claim is made annually with the corporate tax return, either by filing currently with the T2 or amending the T2.
A SR&ED claim is comprised of one or more SR&ED projects several financial forms and schedules. Each SR&ED project is defined by a project description and the associated qualifying expenditures. There is no limit to the number or magnitude of a SR&ED project within a SR&ED claim.
- Identify potential SR&ED projects. Business projects do not translate directly into SR&ED projects, rather sometimes several business projects transcend a common technological knowledge and can be grouped into a common SR&ED project. In fact, the government is not concerned about good or bad business decisions, only that you're furthering your scientific or technological knowledge and hence creating jobs – this goes back to the opening paragraph about the mandate of SR&ED;
- Identify eligible expenditures, and very important, ensure the expenditures align with the SR&ED projects in terms of timeline and supporting the science eligibility;
- Gather supporting documentation, both technical and financial;
- Complete relevant tax forms; and
- File with T2 or amend T2.
See guidance policy paper T4088 from the CRA to learn more about the SR&ED process
When to file: Current filing with tax return that, for corporations, is ideally within six months after fiscal year end. Tax returns can be amended to include SR&ED claims up to 18 months after fiscal year end, but then SR&ED falls off the table.
Support: SR&ED is an easy project to outsource to an external consultant who has successfully spent many years identifying and preparing SR&ED claims for many businesses. Consultants are well versed in the nuances of the SR&ED program and up to date on any changes or interpretations the CRA may administrate. They know the industries, the vernacular, and related scientific or technological knowledge base to build upon a SR&ED claim.
A consultant’s expertise may take the form of complete preparation and defense with CRA, or partial support such as helping to identify SR&ED projects, or reviewing a SR&ED claim prepared by the business staff. Be wary of consultants who do not have the expertise, experience, and track record with CRA to be successful. Ask for references.
Some businesses prefer to dedicate internal staff to preparing their SR&ED claims, and some businesses are too busy to dedicate internal resources to preparing a SR&ED claim. Whether you have internal support or not, Ryan’s tax professionals work with your business to support your SR&ED claims in an efficient and optimized manner.