The CRA is intensifying its focus on documentation, what it considers proper documentation, and how often you need to create documentation, to properly support SR&ED claimable activities in case of an audit. As the CRA continues its deeper scrutiny of claims, you can expect the increase in number of audits to continue, but not every…
DetailsTalk To the Hand You’ve probably heard the adolescent expression “Talk to the hand, cause these ears aren’t listening.” In recent months, I’ve seen and heard similar comments from a few Canada Revenue Agency (CRA) Research and Technology Advisors (RTAs). Their own version of this expression was “I’m just following policies – if you disagree,…
DetailsThe Five Somethings: Part 2 These five criteria were, to recap: (1) presence of risk or uncertainty, (2) hypotheses to reduce eliminate uncertainty, (3) scientific method (per 5-stage process), (4) pursuit of advancement, and (5) EVIDENCE Whether you are attempting to prepare your own SRED claims, or to assist your SRED Practitioner in helping you…
DetailsThe Five Somethings: Part 1 Until December 2012, there were three key criteria for SRED. Now there are five questions, plus a five-stage process … and one compound headache for taxpayers, who have to figure out what will be involved in complying with SRED requirements, going forward. Recent history: With their recently unveiled policy consolidation,…
DetailsIf you expect to claim SRED, CRA requires you to produce enough supporting evidence to justify the claim. Without such evidence, you may never get to discuss technical eligibility to any real extent. CRA will call the work “unsupported”, and simply close the file. Some time ago, I wrote a paper called The Myth of…
DetailsBy Dmitry Brusilovsky, CEO, SRED Unlimited The CRA has recently changed how they do things in terms of SR&ED. Fortunately, they have not touched the eligibility criteria: what qualifies as SR&ED is the same as before. However, they have clarified the manner by which they evaluate claims. This should make the process less confusing for…
DetailsBy Dmitry Brusilovsky, CEO, SRED Unlimited The CRA has recently changed how they do things in terms of SR&ED. Fortunately, they have not touched the eligibility criteria: what qualifies as SR&ED is the same as before. However, they have clarified the manner by which they evaluate claims. This should make the process less confusing for…
DetailsIf you think about it, though, despite all of the flurry of activity around claim review process, policy and guidance documents, and so on … I haven’t yet heard about anything that represents a substantive change to the Income Tax Act (or regulations) and the real bones of the SR&ED program. If anything, there appears…
DetailsThe Canada Revenue Agency (CRA) has been releasing draft policy documents on the SR&ED Program for public comment over the past few months, as a part of an ongoing policy review exercise. They have done so at a time when the SR&ED Program is under intense scrutiny, the subject of two separate review exercises (The…
DetailsThe judgments in these cases are available to be read, via the websites for the respective Courts, and all of them are worthy of detailed study. Of particular note, however, is the fact that the Federal Court of Appeal, in the decision re: CW Agencies v. Canada [paragraph 17], echoes the decision of the Court…
DetailsYou are not legally required to produce detailed written records in support of a SR&ED claim. However, if you don’t, you must be prepared to spend years before the courts in defense of your claim, and you must understand that you will most probably lose. This sentence above is a loose paraphrase of the outcome…
DetailsOthers within the industry have asked, though not necessarily in print, whether the situation within CRA is so toxic, adversarial and politicized that they are unable to sustain and present a consistent public policy in a program the growth of which has posed severe staffing and administrative challenges. But writing a story about political, budgetary…
DetailsRecent anecdotal evidence suggests that the Canada Revenue Agency (CRA) is becoming increasingly detailed (and according to some, who disagree with them, occasionally irrational and unreasonable), in its approach to supporting documentation. This is news? Certain newspapers or columnists continue to create stories about the fact that reports are going to be published, by various…
DetailsMany SR&ED consultants have begun to present their clients with a “SR&ED Application” of some kind, intended to help them organize their SR&ED claims supporting evidence. Competitive pressures drive this behavior, but I see these solutions presented too often as a one-size-fits-all overlay to existing systems and processes, unintelligently, and with no efforts made to…
DetailsIn the evolution of a highly successful and process-driven SR&ED program, there are three stages: prospecting, mining, and diamond-cutting. I define these stages as follows: Prospecting Characterized by investigation and detection, i.e., go out and find it, bring it back, cash in (write up claim, submit, defend), repeat next year. Mining Characterized by organized…
DetailsAs SR&ED Consultants, we owe a duty to our clients to help them develop new capabilities and acquire new knowledge. I think we need to move beyond simple claim preparation into “process development” and even “training”. Personally, I take on that obligation as a fundamental part of the consultant’s role. In case you hadn’t noticed,…
DetailsVariance 3 – Acknowledging or adjusting for the business context of the taxpayer contrasts sharply with the current trend, in which CRA reviewers are holding out definitions of advancement at the industry or technology level, regardless of business context. (Note: This will heavily penalize smaller firms, and effectively eliminates the notion of considering business context…
DetailsPart 1 of this article talked about some of the extra nuances and baggage that the Canada Revenue Agency (CRA) has recently begun adding to terminology that we use in the assessment and preparation of SR&ED claims, along with some of the implications (reduced claims). In this part, I’m going to examine one of the…
DetailsWhat technical means… to CRA What the CRA is teaching now is that the word “technical” refers generically to a domain of activity – technical content, technical issues, technical questions, and technical uncertainty – many of which are perhaps purely routine in nature. (Though, perhaps not, although CRA now tries to taint the word “technical”…
DetailsIf you have come to the world of SR&ED expecting that the CRA will treat you and your claims in a manner consistent with their published information, you will be sadly disappointed, and probably frustrated. It’s no wonder companies look to the assistance of consulting firms for help. It certainly doesn’t help matters when the…
DetailsJust about any book or guide on Canada’s Scientific Research & Experimental Development (SR&ED) Program will include references to SR&ED-related court cases, if not an entire section. Does anybody read them? Really? Of course we do. Probably, most SR&ED practitioners spend some time studying court cases. (I make a personal hobby of it, including the…
DetailsIt really drives me crazy when companies make decisions that accidentally limit their potential for SR&ED – or eliminate the possibility of claiming SR&ED altogether. Any in-house SR&ED program exists to serve the needs of the business, not the other way round. Any external consultancy exists, likewise, to serve the best interests of the client. …
DetailsSuperman is In: This person will claim even the most complex, challenging problems are routine. Ho Hum. Leaping tall buildings, speeding locomotives, technology innovation – all routine. Which would explain why their project budget has doubled, deadlines have slipped, and a project SWAT team has been formed to seek alternatives to the original design. This…
DetailsIf you have a SR&ED process in place, sooner or later, somebody is going to tell you that a project is not eligible… purely because they don’t want to be burdened with supporting a claim. Hard as it may seem to believe… people will sometimes resist participating in the SR&ED program. Commonly, these are people…
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