SR&ED – Maximum Return with the Least Risk

Here’s a formula for getting the best SR&ED return in the least amount of time (and the least amount of minimum risk):

Your research and development SR&ED tax claim may eat up a lot of resources. Not only does the CRA have thousands of pages of eligibility guidelines, but R & D can often be confused with activities that are either “not applicable” or “applicable but not apparent”.

Have your first three to four years of  R and D SR&ED claims managed by a SR&ED engineer. This is someone who has been doing SRED claims for many years, filing many claims in the process. Someone who has both an engineering degree and at least 10 years engineering experience in the field. They should have the research and development tax credit system down to a science.

Your claim for SR&ED research tax credits can be farmed out to someone on a contingency basis, which means they will only earn a percentage of your claim if the claim is successful. You get the benefit of having an expert work on your behalf, without any out-0f-pocket fees or expenses.

Now granted, you are sharing part of the tax credit, and will be paying the SRED engineer a fee once you receive your cheque from CRA. This does work in your favour though, because the SR&ED engineer can sometimes get up to 250% more for your claim than your current advisor or accountant.

There are several reasons for this. The SR&ED application form is 15% accounting, and 85% technical. Where an accountant may see a chair, a SR&ED consultant sees all  of the components inside the chair, as well as all of the processes and materials that make up those components. You want someone with that technical expertise to write your claim.

Many business managers complain about getting their accounting firm or SR&ED consultant up to speed on their technology or technological processes. This can be time consuming and costly. SR&ED Engineers with many years experience in the field will be able to leverage that experience and expertise to your benefit.

Your claim is very dependent on the technical language used in the t661 claims form. Some firms end up spending as much on defending their claim than the actual claim is worth. It’s best to have a SR&ED Engineer assist your accounting team with your claim – and preferably  with a SR&ED Engineering firm that has filed hundreds of claims successfully.

Once the SR&ED engineer gets involved with your claims, you can wean yourself away from using the expert and start making the claims yourself. After 3 -4 years having the SRED engineer transferring the mindset and methodology of what he is doing, you or your staff are going to have the skills necessary to do it independently.