The first step when you find out that your SR&ED tax credit claim has been reviewed by the CRA (Canada Revenue Agency) is to read and understand the CRA concerns pointed out in the SR&ED Review letter.
Usually there are three types of documents being requested by the CRA:
1-General information about the business such as organization chart or business registration.
3-Financial and costing documentations.
To substantiate the SR&ED claim, you should maintain the necessary financial and technical documents and evidences, and ensure that you respond to the CRA request in a timely manner.
During the site visit, the RTA may request for a site tour and talk to key employees regarding their years of experience; qualifications; position title and responsibilities; as well as SR&ED project’s time frame; nature of the technological problems; and alternative approaches sought to resolve technological obstacles. It is highly important to structure your documents and explanation on the way the claim has been prepared and filed.
Key Points to Remember Prior to on site CRA SR&ED Review
- Do not just focus on the final outcomes of the work claimed
- Divide the work into a chronological order
- Determine the technological or scientific uncertainties or obstacles faced, along with the hypotheses formulated to resolve them
- Describe the analysis and experimentation performed together with the conclusions obtained.
- Prepare your explanation on how the work mentioned in the technical narratives has been documented.
- Provide supporting evidences such as time logs, notes, trial logs, time sheets, drawings, emails, invoices, and test results to substantiate and support what you described. Furthermore, make sure to have such supporting evidences to be readily available.
The ones who conducted the claimed SR&ED projects, or those people who handled it, are the perfect individuals to provide the related technical details in determining if the project meets the eligibility criteria. This requires performing an internal review of your claim with your technical personnels to look over project description and remind them about: the project(s); technological obstacles; work performed; and claimed expenditures. Choose the individuals who have the best ability to answer the questions. Do not worry about uncovering confidential information about your R&D efforts since all provided information to the CRA SR&ED reviewers will be treated strictly confidential.
It is important to be prepared for a SR&ED review to make sure that your claim will be successful in the end. When preparing everything for SR&ED review, you should recall the mentioned considerations for your reference. Keep them in mind from now on and believe that you will be able to get the result you have expected right from the start.
If your SR&ED claim has been audited or reviewed in the past or seeking for risk analysis of your current SR&ED claim, do not hesitate to Contact Kelid™ and seek for our professional advice and consultations. For further information for eligibility of your future projects check out our online Assessment LookUP. If you have any concerns regarding CRA SR&ED Review that you feel can help other people in similar situations, leave a comment below.