The Scientific Research and Experimental Development (SR&ED) program is a tax incentive program offered by the Canadian Government and the Canada Revenue Agency (CRA). It is designed to generously support businesses that invest in research and development (R&D). However, a significant number of companies and businesses cannot take advantage of the benefits since they are not applying correctly.
To be successful in your SR&ED claim and to make your SR&ED application process as smooth as possible, you need to:
Always Focus on R&D
Applicants may easily spend too much time on irrelevant content during the SR&ED application process. However, the only thing the CRA cares about is R&D activities in your project, which will determine if your claim meets the SR&ED requirements.
As a result, you need to focus on how your project has overcome scientific uncertainties and achieved technological advancements. Please also remember that all R&Ds should be carried out through a systematic investigation. Here is an example:
- Carry out the hypothesis;
- Test the hypothesis through experiments;
- Analyze the test results;
- Draw conclusions.
Pay Attention to Form T661
The first step to claim tax credits and get a refund by the SR&ED program is to fill out the forms that CRA requires. CRA determines the eligibility of the SR&ED project based on the information provided on the documents and forms. Therefore, form T661 is crucial to the SR&ED application, and the accuracy of filling this form will maximize the chances of getting the refunds.
Form T661 is a two-part form, which includes:
- Part one: fill out SR&ED expenditures
- Part two: SR&ED project information
The way of filling out T661 varies depending on each company’s situation. Ensure to complete all the required lines and keep in mind that some lines have length limitations.
The CRA website provides a direct link to download form T661. There are also some changes to the guide to Form T661, such as the extension of the SR&ED reporting deadline due to the pandemic. Please refer to the latest update on: What’s new – Changes to T4088: Guide to Form T661.
You may find more information in SR&ED Guide: Tips to Fill Out Form T661.
Keep All the SR&ED-related Documentation
Generally speaking, the CRA requires two types of supporting documents for the SR&ED claim:
- the claimed project and;
- the related expenditures.
Some formal documents such as:
- project schedules
- experimental procedures
need to be archived in advance.
At the same time, some informal records are also essential because emails, meeting minutes and paper notes often include important information. The better you prepare the documents, the faster the CRA proceeds your SR&ED claim.
You may find more information in one of the most popular and helpful SR&ED articles: What Documentations You Need to Prepare for the SR&ED Application.
Embrace the Failure of Your SR&ED Project
There are so many misconceptions about SR&ED online, and one of them is that only successful projects can apply for this program. The truth is: expenses for unsuccessful projects could also be eligible to make SR&ED claim.
Failure during the experiment and development process is inevitable. Therefore, companies need to make systematic adjustments to the previous data. But in the end, if it is still impossible to obtain effective results, this kind of failure is sometimes acceptable.
According to the CRA, the key to a successful SR&ED claim is to overcome technical or scientific uncertainties. However, an unsuccessful project is still valuable because many technical problems were solved during the exploring process. In that case, even if the project fails, the related expenditures can still be funded by the SR&ED project.
Work with Professional SR&ED Consultants
It is essential for the first-year application of SR&ED since most companies will continue to apply for 3 to 5 years with the same project. As a consequence, cooperating with a skilled grant consultant team can make the SR&ED application successful, and offer further advice for the R&D directions in the future.
As a part of SR&ED application, if you are selected for a SR&ED Review, the SR&ED consultant team becomes even more helpful on the preparation for the review and whole process.
Requiti Capital introduces a professional grant consulting team according to each client’s unique background and demands. The professional SR&ED tax consultant team includes:
- a project manager
- a research expert
- a technical writer
- a CPA financial auditor
- a senior consultant for the final review of the whole project
How can SR&ED consultant help?
The professional SR&ED tax consultant team provides tax preparation service and covers all the parts of the SR&ED application process, such as:
- evaluate and check project eligibility of your SR&ED program
- estimate how much you can get from the SR&ED tax credit
- prepare and review SR&ED technical reports
- summarize your SR&ED expenditure and prepare/submit SR&ED financial documentations
- support your FTCAS or review
- give advice on your SR&ED claims in the future
We aim to claim all applicable activities to maximize benefits for our clients.
Successful applicants will get a refund of up to 64% of eligible expenses. Over $3B tax incentives are disbursed to more than 20,000 applicants through SR&ED each year. Are you interested in becoming one of them? Please subscribe to our blog or contact our professional SR&ED consultants for more information.