The SR&ED program is the largest tax incentive program in Canada. The program is administered by CRA (Canada Revenue Agency), and has been in existence for over 35 years, since 1985. Yet, only one-third of eligible companies submit an application for their credits, to which they are entitled by law. This is not a grant; it is part of the Income Tax Act of Canada.
1. Why didn’t my accountant tell me about the SR&ED program?
Your accountant may not have known that you are eligible. Furthermore, he or she may not have the expertise to prepare a complicated SR&ED claim. Any credible accountant, however, will attest to the legitimacy of the program, when asked.
2. Why didn’t the government tell me about the SR&ED program?
The government will not fill out your tax return for you, or knock on your door to inform businesses that they may have unwittingly over-paid their taxes. However, the program is not hidden. We encourage you to visit the official CRA website where you can learn about the legitimacy of the program, and even attend a free government-sponsored seminar on the topic.
3. Will this trigger an audit?
You are doing everything possible to avoid an audit, and we are recommending a course of action that could invite one! But the SR&ED department and CRA audit are physically separated and their administrations are purposefully disconnected in order to avoid deterrence from the program. SR&ED auditors do not report any non-fraudulent findings to other CRA departments, and do not investigate other areas of corporate activities, such as health, human resources, taxes collected, etc.
We also remind clients that it’s just a claim, which is significant. The worst case scenario is that the claim is rejected, but there are never penalties associated with submitting a legitimate claim, as long as you have not committed a fraud. You should also realize that you have nothing to lose – worst case scenario is that you receive no refund and pay no consulting fees. You cannot lose. It’s a “no brainer”
4. What if I don’t pay corporate taxes?
Think of SR&ED as an “expenditure credit”. Small and medium-sized companies receive refunds, plus interest, even if they didn’t pay corporate taxes. Sounds too good to be true, but it is indeed the truth. You need to be up to date on your government remittances, however, in order to receive your refund.
5. How much time will this take?
Bond makes every effort to facilitate the process and make it as painless as possible. You will need to spend a few hours with us, and provide financial data with which we tabulate your claim, but your Bond consultant will take care of the rest of the claim preparation.
6. Do I need to have a laboratory or sophisticated facility in order to qualify?
No. CRA recognizes shop-floor technology. We have clients that are cabinet makers and sausage makers. If you conduct experimentation and attempt to solve problems during the course of your work, then you could be entitled to a refund, regardless of your premises or education.
7. Do I need to have documentation?
It’s definitely better to have documentation, but we will assess your claim based upon what you have, and provide you with the tools and training to document better in the future. CRA knows that first time claimants may not have known about the program, as the SR&ED program is retroactive 2 years.
8. Do you have references?
Bond has many references. Just ask.
9. How long does it take to get a refund?
Every case is different. It could take 8 weeks, or 2 years. But most claims are approved within 4 months of submission to the government. Now the federal and provincial governments are harmonized, so processing is quicker.
Now think about it. What are your competitors doing with THEIR refunds? And what could you do with yours!?
10. What is an FTCAS?
First-Time Claimant Advisory Service (FTCAS) is a free in-person service that provides first-time scientific research and experimental development (SR&ED) claimants with an opportunity to meet with local CRA SR&ED staff, at their place of business, to gain a better understanding of the SR&ED Program. During these visits the SR&ED reviewers will provide businesses with advice on the SR&ED Program. This is a guaranteed CRA Approval once the meeting requirements are met. Please ask us for more details or refer to the Canadian Revenue Agency (CRA) website for more information.