‘Assessment, evaluation, examination, reconsideration, appraisal, critique’ – all synonyms of the word ‘review’ – have a slightly negative connotation that give them the veiled effect of a ‘threat’. No wonder then that the term ‘SR&ED review’ is seen with some trepidation by businesses especially those who are first-time claimants. The automatic assumption is that there’s something wrong with your submission and that it has been or will be rejected.
The other side to this is the belief that you will be pulled into time-consuming paperwork and legalese. There’s a strong need to dispel these preconceived notions because it actually hinders the program’s aims by dissuading claimants from legitimately claiming their tax credits. As we said in our blog, What is SR&ED, such developments can stunt the drive and fervour of businesses to invest in innovation and R&D.
What does A SR&ED Review Mean?
After submission, SR&ED claims are subject to a risk assessment to check their ‘completeness’. Some claims are accepted as filed, some will be selected for a desk review and others for a detailed technical and/or financial review.
Link to what happens after I submit my claim?
A Review does not equal Rejection
Having your claim selected for review does not imply rejection. It simply means that the reviewer needs more clarification. A SR&ED Review is the result of an assigned Research and Technology Advisor (RTA) not being able to conclusively determine whether your work is eligible for SR&ED.
The starting steps of a SR&ED technical review
The RTA starts by reviewing the supporting information you filed with your claim. They may also check your past SR&ED claims. External information sources may be consulted for more subject knowledge.
The RTAs may have concerns that range from the eligibility of claimed work to the extent of SR&ED work involved and/or issues with your supporting documents.
Making the first contact
RTAs will first call you directly. It is entirely possible that all doubts are addressed here. If not, a physical visit may be required.
The site visit
Many managers, CEOs and entrepreneurs baulk at this point because the process seems daunting. However, when planned and prepared for in advance, along with the RTA themselves, it can be a seamless experience.
The RTAs aim is to gather as much information as possible during the site visit. The idea is to confidently eliminate all doubts regarding the eligibility and/or extent of your claim. The CRA website covers this process in detail. Here’s a quick look at some of the basics that we think are important to keep in mind.
- The RTA will convey the purpose, agenda and dates of the visit.
- The RTA will explain the program, its rules and policies in detail if you ask.
- They will let you know if they want to interview the people involved in the work, learn how the claim was put together, tour the premises and review any additional documents. You can prepare by keeping all documents handy and by briefing SR&ED performers about the claims as well as the issues that will be raised by the RTA (conveyed in advance).
- They may seek to visit the place where the claimed work was performed (labs, testing facilities, workshops and more).
- They may ask for copies of supporting documents.
At this stage, the RTA may communicate a preliminary decision on the spot.
The SR&ED Review Report
Once done, a summary of your technical review is prepared. All discussion points and the RTA’s observations and explanations are covered here. The final decision and its rationale is clearly mentioned in it.
What happens if you disagree?
When you disagree with the RTA’s report and decision, the official policy provides for a “three-step process whereby a claimant is encouraged to talk first with the RTA or the FR to resolve disputes, second to talk with the RTM or the financial review manager, and third to ask for an administrative review by the assistant director, SR&ED.”
The appeals process
If the above result is unacceptable to you, you can appeal the verdict by requesting a “…formal review of it by filing a notice of objection with the CRA”. This should be done within 90 days from the date of the notice.
The above is just a basic overview of the steps involved in a SR&ED review. To familiarize yourself with the details, we recommend that you check the CRA’s resources. Even better, you can reach out to your consultant for advice. If you’re already in the review process, the assigned RTAs can and will help. We strongly believe that the key to getting a SR&ED review right is to understand that it can be a quick, efficient and seamless process if we allow it to.
Next: How to work with the CRA