If the reviewers from the CRA are still unsatisfied with the SR&ED supporting documents (either technical or financial), they may conduct an on-site SR&ED review meeting with the applicants. Due to the COVID-19, all the meetings are online, but it is still necessary to be ready.Â
The SR&ED review process is:
- Self-introduction and Business Description
- Introduction about the SR&ED Program
- Important Questions about Your SR&ED Project
Please note that the process may vary from reviewers during the meetings, but we strongly recommend you prepare for the questions and topics before the meeting.
Knowing the purposes and types of SR&ED review and the best practice to prepare SR&ED review give you more understanding and help to a successful SR&ED claim.
Self-introduction and Business Description
The first part of the SR&ED review meeting is mainly about introducing your company and business. The most important thing for the applicants to survive an SR&ED review is to be transparent and reasonable with SR&ED reviewers from the CRA since this meeting aims to get the information they require. Moreover, some companies are used to focusing on their product during the sessions. However, the only thing that the SR&ED reviewers care about is the SR&ED project and its technical and financial issues behind it.
Therefore, after getting clear differences between the company project and SR&ED project, applicants need to minimize sales and product-oriented discussions and maximize conversations that highlight attempts at technological advancement when speaking with SR&ED reviewers.
Introduction about the SR&ED Program
The review meeting will also contain an introduction to the SR&ED program. And the objective of this part is to help the applicants fully understand the SR&ED program. Besides, this part will mainly be carried out by the reviewers and contents may include:
- Definition of SR&ED
- SR&ED official website
- Methods for determining eligibility
- Filing and completing T661 form
- Salary and wages
- Contract expenditure
- Overhead and other expenditure
- Government assistant
Some Important Questions about Your SR&ED Project
What technical uncertainties did you have?
During the innovation, you may face technical uncertainties about whether or how the result could be achieved, which could also be “translated” as – you cannot simply just find the answer online. Technical uncertainties are the key to an SR&ED project. Applicants need to show the SR&ED reviewers their uncertainties and how they develop hypotheses to overcome them.
What are the attempted solutions?
According to the CRA website, a successful SR&ED project has to be carried out through systematic investigation. In other words, applicants need to follow the scientific method when testing their hypotheses. The structure below is a perfect example:
- Carry out the hypothesis;
- Test the hypothesis through experiments;
- Analyze the test results;
- Draw conclusions.
Furthermore, the outcome of those testing, successful or not, has resulted in your team gaining knowledge. Therefore, applicants will determine whether they have overcome the technological uncertainties or cannot overcome them. Regardless, they have achieved technological advancement.
How did you track your SR&ED hours?
Another key focus of a review meeting is salary and wage expenditures. The CRA wants to ensure that the amounts to claim are indeed eligible, which goes beyond technical eligibility. They’re looking for the amount of time employees spent working on SR&ED projects.
As a consequence, timesheets that document both SR&ED and non-SR&ED work necessarily support your claim. As explained in the 4th item of the truth of 5 common misconceptions about SR&ED, the records can be hand-written or in Excel format. The CRA is looking for applicants to keep timesheets that identify employees who directly engage in the SR&ED project with attributes such as date, vacation time, estimated hours worked, overtime hours, meetings, and total hours.
How did you track financial documentation?
Applicants must keep all the related invoices and receipts in order to make a successful SR&ED claim. For example, if you have received a paper receipt, it’s best to retain the original document. However, if those original documents are not available, the electronic form is also accepted. There are ways to convert paper documents to electronic forms. Electronic image formats are acceptable if they are accurate, display the exact same information as the original, and match the original in clarity, resolution, and hue.
To know if your business system meets CRA record-keeping requirements, understand that the CRA needs to easily evaluate your electronic data files and the overall reliability of your documentation. The more applicants build transparency into their systems before SR&ED projects begin, the less likely they will run into problems in the future.
Summary
After the review meeting, applicants will receive the SR&ED review report. They might need to provide additional materials again, but if everything goes well, the claim will be submitted for further processing, and finally, they will receive the refunds.
All SR&ED claims go through the same initial process, but more complex claims will experience additional stages, such as review meetings, for the CRA to reach the final verdict. Therefore, the processing time of each claim will vary as well.
The SR&ED program page provides quick overview about SR&ED tax incentive program with helpful resources, such as SR&ED eligibility check and SR&ED calculator.
If you are interested in applying for SR&ED or have additional questions about SR&ED reviews, Â please do not hesitate to contact our SR&ED professional consultant to schedule a face-to-face appointment.
