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Top 10 Filing Myths to Filing an SR&ED Claim

The Canada Revenue Agency (CRA) started the Scientific Research and Experimental Development (SR&ED) program over 20 years ago. While both knowledge of this program and the number of companies claiming for the program have grown, some misconceptions have arisen about the program that have prevented eligible companies from claiming all that is eligible, or even from filing at all.

Myth #1: We do not have SR&ED!

Many companies do not file for SR&ED but do not even realize it! NorthBridge has found eligible SR&ED activities in every industry. It is definitely worthwhile to consult a SR&ED professional for an expert opinion - this consultation will help you identify project activities as they occur.

Myth #2: SR&ED is Limited to R&D Lab Workers

Potential SR&ED projects exist in any business scenario - not just where someone is wearing a lab coat. Your employees who do not have formal training in their background often become technical experts by their experience, and these employees must continually develop new products or process to keep your company competitive. SR&ED typically happens on a daily basis, out of the necessity to stay in business.

Myth #3: Our Secrets are at Risk

The CRA reviewer who goes over your SR&ED claim will only look as deep as he or she needs to in order to confirm that what you are claiming is eligible for the SR&ED program. If you have to divulge information that is proprietary to your business, be reassured that the CRA follows a strict set of security policies that prevent your information from being divulged.

Myth #4: We Have no Documentation With Which to File

Even though you don't necessarily believe that you have documentation, it's very likely that you do. Documentation can include meeting minutes, time sheets, samples or sketches. We work with you to pull together the best documentation for your claim, and help you put tracking methods in place.

Myth #5: Claiming for SR&ED Might Call a Corporate Tax Audit on Our Company

The SR&ED department of the CRA does not communicate with the other divisions of the CRA - their only interest is in reviewing your claim for the SR&ED project, so filing for the SR&ED program would not result in getting a corporate tax audit.

Myth #6: We Already Receive Government Funding and Can't Claim SR&ED

SR&ED is one of the most generous forms for R&D funding in Canada. It isn't industry or sector specific like a lot of other available funding. Because the SR&ED program focuses solely on R&D work, you can still apply for additional funding for those areas the SR&ED program would not cover.

Myth #7: It's Not Worth the Effort

Canadian Controlled Private Corporations (CCPCs) can receive up to 72.7% on approved labour expenses. A project that involves just a few characters can easily exceed a few hundred thousand dollars in claimed expenses.

Myth #8: Tracking SR&ED Projects is too Time Consuming

You are probably doing a lot of tracking without realizing it, through meeting minutes, testing sheets, etc. We will work with you to identify projects and processes, as well as to put tracking into place while your SR&ED projects are ongoing - this way, all costs can be captured as they are being incurred, and there isn't the possibility that something is overlooked.

Myth #9: We Have Already Maximized our Past Returns

NorthBridge Consulting Services has a proven track record of finding even more eligibilities than were previously submitted for companies who aren't claiming for the first time. Often, we find that projects and costs are going under-reported, which means that you could be missing out on an even larger return. To see what you're missing out on, NorthBridge can provide you with a second opinion on your current claim.

Myth #10: Nothing Can Be Done About a Rejected Claim

The CRA does not always assign an expert in your field to review your claim, so they may not fully understand why what you are doing is SR&ED eligible. As long as it is not 18 months past your fiscal year end, you can submit an amendment to your claim. Also, if you believe the reviewer did not fairly implement the SR&ED guidelines during the review, you can file an appeal.