Filing your SR&ED claim
How do I file my SR&ED claim?
To file a SR&ED claim, you have to file an income tax return along with Form T661 and other supporting documents. In Form T661, write about your business and provide contact information.
Then explain your SR&ED project. If there are multiple projects, you must provide detailed information about each. Information you need to supply in your SR&ED application includes the methods used, and the advancement achieved. Moreover, you need to clearly indicate the expenses that you want to claim for each project. And you need to indicate how you have calculated your expenses, through the traditional method or the proxy method.
Next, supply information about your claim preparer. Lastly, sign and confirm that all the information you are submitting is true. Make sure all relevant documents, supporting documents and evidence are submitted before the deadline deadline.
The CRA carefully checks each claim and will reject any that do not meet its criteria. So it is highly recommended that you consult SR&ED professionals. Our team of experts can help you in gathering, filing and reviewing documents. And they will come to your aid if any query or difficulty arises to make sure your claim gets approved.
What supporting documents do I need for my SR&ED claim?
To prove that the SR&ED project took place and the expenses relating to it were incurred in that year, you need to present supporting documents to the CRA.
It is best if these documents are signed and dated and relate to the period for which the SR&ED project was active. Though expenses incurred after the completion of the project may also be eligible if they are relevant.
Supporting documents can be in many forms including plans, invoices, financial statements, pictures, notes, testing records, samples, journals, ledgers, agreements, contracts, etc.
When should I file my SR&ED claim?
It is essential to be alert to the submission deadlines. You should prepare beforehand and not rush through the filing process. If you do, you risk your application being rejected for being incomplete or insufficient.
You need to file your claim between fifteen and eighteen months from the end of the fiscal year. The exact deadline depends on the category of tax filing you belong to. For example, corporate tax filers have eighteen months to submit their claims.
We recommend you file the claim within six months of the year end. This helps if you need to make amendments or add information to your claim as you can do this up until the deadline.
Note: The CRA will not extend the deadline unless it falls on a weekend or holiday. Then it is generally pushed to the next business day.
How long does the CRA take to process my SR&ED claim?
The CRA will process your refundable claim within sixty calendar days of filing. If a claim has to be reviewed, it can take up to 180 calendar days. For non-refundable claims, it may take up to 365 days. These time scales assume that you provide all necessary documents within a reasonable amount of time of the CRA requesting them.
After you have filed your claim with your tax return, the CRA will process it and award you the SR&ED tax credits and/or refund.
If your claim gets selected for a review, the CRA will get your tax return checked and assess it. CRA reviewers might decide to visit your factory, laboratory or workplace to speak with your staff and verify the costs added in the claim actually arise from the scientific or technological research and development.
After the review process, CRA will decide whether to approve or deny your claim.
If you do not agree with the decision because you feel it was unfair, the facts were distorted or the law was not implemented correctly, you have the right to file for an objection. The CRA gives immense importance to resolving disagreements. Filing for objection may result in further evaluation of your SR&ED project.
If you are still not satisfied with the CRA's decision, you can go to The Tax Court of Canada and appeal on the CRA's assessment or reassessment upon your objection. The decision of the court is final.
SR&ED in a shop floor environment
Shop floor SR&ED refers to SR&ED taking place in a manufacturing business. Claiming SR&ED refund in such a space can be tricky as normal work which does not fall under SR&ED occurs simultaneously with R&D. Resources are shared between the R&D project and normal routine work. For example staff might be working for both undertakings, and rent and bills would be shared, etc.
To claim an SR&ED refund for such a project in these circumstances, it is vital to differentiate between costs of both works so expenses can be allocated efficiently between SR&ED and routine work. These circumstances usually apply when there is some technological advancement happening, though basic research and applied research may also be included. This usually happens when assets are being developed or production runs are taking place.
SR&ED Program Services
The SR&ED program offers several services free of cost to the claimants to make the refund process as easy as it can be.
First-time claimant advisory service (FTCAS):
If you are new to SR&ED and have limited information about filing a claim or you are not sure whether you are involved in SR&ED, this service is for you. FTCAS aims to supply you with necessary knowledge about the requirements of the SR&ED program and every step that you have to go through to successfully file a claim. SR&ED reviewers also give guidance about the types of documents and records you need to keep.
If you get selected, It is mandatory for you to attend all FTCAS meetings. You will be informed via letter when you are selected and the CRA officials will arrange a meeting after discussing a suitable time. The CRA officials will provide you with any information you want about your SR&ED claim preparation. After the meeting, a report with a summary of the discussion will be sent you, with a request for feedback about the service.
A pre-claim consultations helps you to determine whether you are participating in SR&ED. You can request a consultation for three projects per year within four months of the year end.
To be eligible for the pre-claim consultation, your project must have started already and should not have been previously reviewed for eligibility. To request pre-claim consultation, you need to fill out an online form. An officer will get in touch with you for more information. Make sure you give out the accurate details to the officer, and provide the correct name and contact information for the business. The officer might even visit your site and help you decide whether any of your work qualifies as SR&ED.
An SR&ED claim is reviewed after the year ended. But you can get your project reviewed while it is still in progress. This will help you to take all the steps needed to ensure you are eligible for SR&ED before you file you claim.
To qualify for this service, you need to be based in Canada. You should have taken part in FTCAS, pre-claim consultation or SR&ED review previously. Moreover, you should be prepared to attend all review meetings and are expected to provide a SALT report in regard to each project you want to claim. Lastly, you cannot claim more than 20 projects in one year and none of these projects should be subject to any kind of legal limitation.
If you are eligible for this service, you can submit a request form.
Self-assessment and learning tool (SALT):
SALT helps claimants understand the SR&ED program better. Claimants fill out a two-step PDF form which can be downloaded on any electronic device. It produces a report at the end of the questionnaire and helps in determining your eligibility for the SR&ED program. It also calculates eligible expenditure estimates and expected SR&D tax credits and/or refunds.
Any information you fill out is kept confidential and cannot be transferred to the CRA.
For more queries concerning any of these services, you can get into contact with your local SR&ED offices.