What happens when CRA decides to do a SR&ED audit

The Scientific Research and Experimental Development (SR&ED) tax credit program is a federal incentive program for companies performing scientific or technological research.

When you file a claim for a research and development project, you’re confirming your SR&ED project is eligible based on research and technological advancement conducted by your corporation. Once your claim is submitted, it will be processed in less than 120 calendar days from the date it was received. 

The technical and financial staff at the Canada Revenue Agency will look closely at your claim and either process it or request additional information. When your claim is processed then it is either approved, or CRA decides to audit your claim. 

Causes of an incomplete claim

This is not an exhaustive list, but if the following circumstances occur, CRA could review your claim:

  • Your corporation filed an incomplete claim 
  • The claimant is unable to meet with or contact the CRA in a timely manner to fulfill the request for information 
  • The SR&ED schedules were filed, but other T2 schedules were missing 
  • Previous audits affected this year’s claim
  • Lack of response to CRA’s request for further information

These situations are often beyond the control of the CRA and may delay processing time until the request is fulfilled. 

How CRA audits affect future funds

If you’re facing an audit on your claim, you can have peace of mind knowing your future potential funds are protected. The CRA is staffed with professionals who carefully assess the technology being created to determine eligibility. Audits are treated independently year by year and do not affect future funds or clawback past funds, even if you were found ineligible in previous years.

Does my business qualify?

Before your organization begins to file an SR&ED, it’s important to understand what qualifies your company to receive the tax credit. The CRA offers this credit to businesses that are contributing to technological advancement or facing technological uncertainty.

If you question whether you qualify for a tax credit, the first step is to determine what your business does in the realm of technological advancements, such as creating new and improved materials or processes. Whether your business is contributing to overcoming technical challenges or taking risks to improve your technology beyond the knowledge of qualified personnel, you may be eligible to file an SR&ED claim. 

The following areas are eligible criteria for a claim, and all must be met to qualify: 
  • Technological Advancement: Researching and experimenting with technological development to generate new information. 
  • Technological Uncertainty: the hindrance of resolving unknown problems with the help of professionals in the field. 
  • Technical Content: the articulation and scientific hypothesis, and description of major development milestones of these technological advancements.. 
  • Support Documentation: which reflects the above, and is generated at the time of development.

Turnaround time for funds

Once you submit your claim and don’t receive a request for more information, the Canada Revenue Service will start processing your claims quickly. The majority of claims are processed in about two months, then funds are released to your corporation.
Processing time typically can take up to 365 days if problems arise.
  • Refundable claims can take up to 120 days to process.
  • Non-refundable claims can take up to 365 calendar days
  • Claimant requested adjustments on refundable claims can take up to 240 days
  • Claimant requested adjustments on non-refundable claims can take up to 365 days to process

About Conceptinero

We are a full-service professional SR&ED Consulting Firm specialized in the Medical Science, Software and Manufacturing industries. We have a 95% success rate in getting CRA to refund up to 65% of your research and development costs.

We engage with you to assess the technical and financial viability and make sure your claim gets approved by CRA without an audit. We have submitted $50M in claims to the CRA. Over 320 claims were accepted as filed, for an average $146,000 per company.

Unlike larger SR&ED consulting firms, we offer full service from an individual consultant who gets to know your team and fully manages your CRA claim. We don’t expect you to do the heavy lifting, which means maximum results with minimal input from your team so you can focus on your business.

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