Claimants paying 30% in fees – meaning that out of $4 billion of SR&ED tax credits paid out, consultants received $1.3 billion!
A recent article in the Globe and Mail is considered to be a bit sensationalistic around the subject of SR&ED consultants and the fees they are paid. Here is a bit of background on how the business works, and what clients actually pay.
In some instances a claimant my pay 30%, but most of the time clients pay anywhere from 5 – 15% if they do some of the work internally. Larger clients with substantial claims would not be paying 30%, just because of the competition in this business alone. The amount that goes to clients overall is north of 90%.
The Business Development Bank of Canada, which is a government organization, has been known to charge businesses up to 50% of their anticipated SR&ED refund. So obviously consultants are providing competitive pricing for this type of service.
Sometimes clients pay a higher rate just because of all the work involved. The CRA requires the same amount of documentation regardless of how large a claim is, and this creates a fixed amount of time to produce and substantiate all the paperwork – even if the claim is small. As a rule, the larger the claim, the less a client will pay, and most consultants have a sliding scale that reflects what the percentage will be for the amount of work involved. And as mentioned, in a competitive market, the savvy client will shop around for the best rate.
Hopefully this type of article does not dissuade clients from seeking professional help with their claims. CRA reviewers can be hard to work with, and no one wants an audit or a challenged claim. As one consultant has been quoted as saying: “I can assure you that should the government decide to impair or eliminate the program, R&D jobs will move off-shore faster than you can say shareholder value.”
In some instances a claimant my pay 30%, but most of the time clients pay anywhere from 5 – 15% if they do some of the work internally. Larger clients with substantial claims would not be paying 30%, just because of the competition in this business alone. The amount that goes to clients overall is north of 90%.
The Business Development Bank of Canada, which is a government organization, has been known to charge businesses up to 50% of their anticipated SR&ED refund. So obviously consultants are providing competitive pricing for this type of service.
Sometimes clients pay a higher rate just because of all the work involved. The CRA requires the same amount of documentation regardless of how large a claim is, and this creates a fixed amount of time to produce and substantiate all the paperwork – even if the claim is small. As a rule, the larger the claim, the less a client will pay, and most consultants have a sliding scale that reflects what the percentage will be for the amount of work involved. And as mentioned, in a competitive market, the savvy client will shop around for the best rate.
As one consultant has been quoted as saying: “I can assure you that should the government decide to impair or eliminate the program, R&D jobs will move off-shore faster than you can say shareholder value.”