CRA SR&ED Claim Audit: an opportunity or a threat
CRA audits of SR&ED claims should not be confused with the traditional CRA audits that a number of us dread. We should welcome these audits. Here, the objective is not to ensure that you have paid your fair share of the taxes, but to guide the claimants on filing of future claims. Like its other accountabilities, CRA wants SR&ED claims to be self-administered.
In an ideal world, CRA would like to receive the claim that meets the eligibility requirements spelled out in subsection 248(1) of the Income Tax Act, ensure that pertinent costs have been captured accurately, and the submission has been filed on a timely basis. CRA auditors want to simplify their task and would like to approve claims with a cursory desk review. In order to achieve this goal, they want to train claimants on the SR&ED claim eligibility criteria and accurate capturing of costs. Training claimants is one of the key objectives of the audit.
So, the SR&ED audit should not be viewed as a threat, but an opportunity to learn and get valuable insight into CRA’s perspective. For a consulting firm like Resultel, it is a continuous learning experience, highlighting the pitfalls to avoid, and provides a better understanding of the kind of development activities that are likely to qualify for SR&ED claims. Every audit underscores how to structure and frame one’s subsequent submissions.
We at Resultel find, compared to 15 years ago, a lot more clarity about the intent of the program and how CRA administers it. In addition, there is far more consistent application of the program, and more uniformity across various auditors and offices.