Archive for the ‘tax incentives’ Category

Along with the other changes that the CRA has been implementing over the past couple years, the Claim Review Manual has been updated. This is the manual that tells the CRA reviewers what processes they need to follow when reviewing an SR&ED claim. This review manual is meant to make the review process more consistent from review to review, and from reviewer to reviewer. It sets out clear guidelines as to what is to happen in a review, and what kind of timeline the reviewer should be following when working on a claim. The manual is also supposed to increase the co-ordination between the technical and financial reviewers, and to increase the communication quality between the reviewer and you (the claimant).

The CRA’s website has laid out the steps to a review, as listed in the CRA Review Manual. A brief overview follows:

1. Preparing and planning:
   • Reviewing your claim
   • Identifying issues with your claim (ie – areas they are unsure can be considered SR&ED)
   • Making first contact with you
2. Conducting a site visit:
   • Preparing for the review (the reviewer will contact you by phone or letter to discuss when the review will happen)
   • Preliminary review work (interviewing any possible staff involved with the SR&ED work, explaining the SR&ED program, etc)
   • On-site review (tour of the facilities, interviewing staff involved in the SR&ED work, reviewing supporting documentation)
   • Request for more information to be sent to the CRA reviewer
   • Communication of preliminary decisions (if possible, the reviewer will let you know what kind of results to expect from your claim submission)
3. Finalizing results:
   • SR&ED review report (prepared by the CRA for you, to allow you to review it and provide any new information if you disagree with their assessment)
   • Finalization of technical and financial reports (these reports will be sent to you by mail, be delivered in a meeting, or discussed over the phone)
   • Dispute resolution (if you disagree with the CRA’s final report)
   • Appeals process

Aggressive offshore competition isn’t new to us here. Let’s face it – it can be tough to survive when products similar to yours can be purchased for a fraction of the price from a company that doesn’t even operate in Canada. This can lead to a huge reduction in sales, can result in non-profit situations, and can cause difficulties for any company that is trying to remain competitive. In some cases, this causes business closures.

Businesses need to do what they can to offset those financial situations, and reclaiming costs for projects where you faced challenges can help your company become profitable again.

The SR&ED (Scientific Research and Experimental Development) program can definitely assist in situations like this – a lot of expenses can build up through test runs, failed projects and lengthy experimentation, and reclaiming some of these costs can make a very large difference in a company’s financial standing. The recovered costs can help offset the effect that offshore competition may have on your business, and can be used to invest back into your company.

Have you taken a look at how SR&ED can help you remain competitive with offshore competition?

A press release has been issued about some upcoming changes to the SR&ED program. A few points mentioned by Minister Blackburn today, while addressing the 13th Annual Tax Practitioner Information Session, relate to upcoming changes to the SR&ED program:

• starting on April 1st, 2010, reviewers will be spending more time explaining the program (requirements, application process, decisions made, etc) to claimants. Starting on the same date, if the CRA finds a company is missing eligible projects, they will let that company know sooner so they can resubmit their claim within the filing deadline.
• beginning in July, the CRA will be posting quarterly reports on their website as to how long it takes for them to review an SR&ED claim from start to finish.

These changes are a result of some of the feedback they have been receiving about the SR&ED program lately, especially in relation to the consistency of the program.

Minister Blackburn has also said that there will be more changes to the program in the future – we will be reporting on these changes as soon as we have word about them.