INNOVATION January-February 2013

SR&ED claim without delving into the complexities of contract payment rules. What supporting documentation is required? Companies are encouraged to identify SR&ED projects as early as possible, because much of the project’s documentation will be required for the claim. This includes records of resources and staff hours, project planning documents and records, drawings and designs, photographs, videos, contracts, lab notes, records of trial runs, progress reports, project meeting minutes, test protocols, data and analysis, samples and artefacts, etc.

determined by the size and complexity of your claim. Does it matter where my company’s funding comes from (i.e., whether or not it is commercial)? The intent of the Canadian government is that only one Canadian taxpayer is entitled to claim the eligible SR&ED activities. Your contract with your Canadian client determines eligibility; specific factors include performance parameters, intellectual property/copyright ownership of SR&ED activities, and who is taking on the technological and financial risks. In the case of contracts with foreign clients, the Canadian company is entitled to file the

How time consuming is it to prepare an SR&ED claim? Some companies choose to prepare their own SR&ED claims in-house. If you have the necessary resources, you can prepare the claim in-house, although it might initially take more time. Professional help from both technical and tax perspectives is available. How will my first-time claim be reviewed by CRA? Typically, first-time SR&ED claims are reviewed by both a technical adviser and a financial reviewer. The review is performed by CRA based on the technical descriptions you have submitted. The length of the review is generally

For more information about the Scientific Research and Experimental Development Program, visit the CRA’s website for the program: www.cra.gc.ca/sred/. This government website offers documents and links to useful information. You can also consult with an SR&ED program advisor for help on identifying your SR&ED eligible projects and assistance with filing your claim. v

Roz Seyednejad, P.Eng., M.Eng., MBA, is Managing Director of Stratesol Consulting Inc., a strategy consulting firm specializing in the SR&ED tax credit program. The information in this article is intended for information only and is not intended as legal or tax advice. Be sure to consult with a qualified tax specialist or Canada Revenue Agency SR&ED advisor regarding your specific questions.

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