CRA’s SR&ED claim reviews are really inevitable. Every time you submit an SR&ED claim to the CRA, your claim maybe reviewed in a detailed manner to make sure that it meets the requirements of the program. Statistics show more than 25% of SR&ED claims are being reviewed since the CRA’s recent changes have been adopted.
CRA has Research and Technology Advisors(RTA) that are trained to request answers for the Five Questions related to the SR&ED projects. This new and structured approach has helped the CRA to determine limitations of the underlying science or technology pertinent to each project and investigate why technical due diligence was required for newly developed or improved products, materials or processes.
Five Questions asked during the CRA SR&ED claim review:
1. Was there a scientific or a technological uncertainty that could not be removed by standard practice/engineering?
2. Did the effort involve formulating a hypothesis specifically aimed at reducing or eliminating the uncertainty?
3. Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypothesis?
4. Did the process result in a scientific or technological advancement?
5. Was a record of the hypothesis tested and results kept as the work progressed?
Following the above Five Questions, RTAs may also ask questions regarding:
- the work done and the current project status
- the start and the end date of the project(s)
- the personnel that are involved in the project(s) with their roles, qualifications and years of experience
- the work that each contractors has conducted and elaboration of ownership of generated intellectual property
- the work that does not fall within the label of SR&ED like the commercial production, usage of equipments, whether the claimed materials have been transformed or consumed in SR&ED.
How to deal with SR&ED Claim Review with the CRA?
- Always review the technical descriptions of your submitted documents along with your income tax returns.
- Invite your financial and key technical employees, who are involved in the work that is being claimed, to attend the meeting with the RTA on-site and to refresh their memory in regards to the program requirements.
- Documentation is the ultimate key to both defending your claim and assessing eligibility. The CRA conclusion highly relies on the demonstrated evidences and facts reported by RTAs.
- Talk to Financial Reviewers (FR) or RTAs about your concerns. You can ask them about the details and other information with regard to the review process and better understanding of eligible projects and expenses for future projects.
- Make a contact with a Financial Review Manager (FRM) or a Research Technology Manager (RTM) if you are not satisfied with decision made to your SR&ED claim. RFM and or FRM will likely review the facts of your case and deem your perspective concerning the issues you have on your claim and also of the FR and or RTA mentioned above.
- Requesting of an Administrative Second Review if you are still feeling that your concerns are not yet addressed satisfactorily. This is done by writing to the Assistant Director of SR&ED along with documentations that will support your specific case.
- Appeal Process: If ever you still disagree about the Notice of Assessment, disregarding the facts whether you received an Administrative Second Review or not, you have the choice to file a notice of objection within ninety days of the Notice of Assessment.
Kelid™ has identified more than 20 reasons that may result in SR&ED claim review. We strongly encourage you to reach us for advise and guidance for eligibility of your projects and check out our project assessment look-up to minimize the risk of your SR&ED claim review.