Before filing your SR&ED claim, there is a lot to prepare. Documents that need to be saved and organized. Technical descriptions that need to be written. Expenditures to double-check. After your SR&ED claim has been filed, it becomes a matter of waiting to see if you were approved or denied or if there is a review to be initiated.

To minimize the stress and inconvenience, here is what to do before and after an SR&ED claim is filed.

Identify eligible SR&ED work.

In your SR&ED claim, all eligible SR&ED work must be described in detail, including what was done, the actors involved, and the result. To be eligible for SR&ED funding, a project must have attempted to achieve scientific or technological advancement through a search or systematic investigation using experiment or analysis.

There must also be a scientific or technological uncertainty that existing knowledge or resources cannot address or resolve. Ideally, there will be documents supporting each of these points on an SR&ED project from the beginning.

You may have SR&ED work coming from multiple projects or different years. You may have a project wherein some of the work is eligible, but other aspects are not. As you organize an SR&ED claim, you will want to group SR&ED projects and group SR&ED work. How you do this is up to you, so long as there is clear identification of eligible work.

Calculate SR&ED expenditures.

Calculate and double-check your SR&ED expenditures. Salaries or wages must be for employees’ time directly engaged with SR&ED work and paid in the tax year. Contractors and sub-contractor fees can also be included under expenditures. Materials consumed are included in expenditures. These must be calculated and vetted, ideally by an accountant, to ensure that everything is accurate.

Also, calculate what your project qualifies for regarding SR&ED investment tax credits (ITCs), understanding the expectation.

Complete all required forms.

Ensure that all SR&ED forms are completed in their entirety. The primary form to complete is Form T661 Scientific Research and Experimental Development (SR&ED) Expenditures Claim. This involves writing a technical description and breaking down your expenditures and how they’re calculated. This form must be submitted with a corporation’s income tax and investment tax credit.

When SR&ED forms are deemed incomplete, the claim will be denied and returned to the applicant with a request for further documentation. Something to consider is partnering with an SR&ED consultant who specializes in SR&ED. They may be able to help ensure this doesn’t happen as they are skilled and knowledgeable about what needs to go where in an SR&ED application.

File SR&ED claim.

An SR&ED claim, complete with SR&ED expenditures and ITC information, must be filed and submitted to the CRA no later than 12 months after the income tax return is due. Do not miss this deadline, no matter what.

Most provinces have some version of an SR&ED program to reward research and development. The only areas in Canada that do not have R&D tax incentives are PEI, Nunavut, and the Northwest Territories. As you’re organizing your federal SR&ED claim, be sure to have your eye on what to do at the provincial level.

Support your SR&ED claim.

SR&ED claims that are accepted are typically processed within 60 calendar days of the date it’s received. When a claim has been selected for review, it’s the aim to have this review done within 180 calendar days of the day the completed claim is received. However, these targets may not be exact for your situation.

There can also be delays relating to an incomplete claim, an SR&ED claim filed without an associated tax return, requests for information that have gone unfulfilled, cases where a claimant postpones or is unable to have a meeting with the CRA, and cases where a previous-year SR&ED claim is affecting a current-year claim.

All technical and financial information and documents that support your claim should be kept. Regardless of how insignificant they may be, they can help if your SR&ED claim is selected for review. Keeping these documents for six (6) years is recommended from the end of the last tax year they relate to. This is what is expected.

• Technical information can include any documents generated during work. Photographs, videos, and any artifacts relating to the work can also be kept.
• Financial information, including financial statements, ledgers, journals, and electronic records, may be requested. Receipts, contracts, and general correspondence may also be asked for.