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Supporting ‘Technical Aspects’ of a SR&ED Claim

At SREDucation, we’re taking the time to document all of the changes that have occurred to the SR&ED program over the years. In our “From the Archives” series, you’ll be able to see how the program has evolved since its inception in 1986. For a timeline of these events, check out the SR&ED Tax Credit page on Facebook. Stay current with the program by understanding the historical context. 

On Supporting ‘Technical Aspects’ of a SR&ED Claim

On July 25, 2002, the Canada Revenue Agency (CRA) released a document intended to help claimants, the agency and others to find ways of supporting “the technical aspects of an SR&ED claim.”

The CRA explained that claims are processed using the principles of risk assessment, and examining the claimants’ history with past SR&ED claims. However, sometimes the information submitted in a tax return is not enough for the CRA to make a determination as to whether certain work is eligible for SR&ED.

“CRA may request additional, i.e., supporting, information from claimants before processing their claims,” the document stated.

“The purpose of seeking the supporting information is to gain a better understanding of the claim and to provide reasonable assurance that the claim is within the boundaries of the program, in a material sense.”

Form T661: The First Step in SR&ED

The first step to a successful claim is to file form T661. The form includes a description of the work and the boundaries of it, the CRA stated. Reviewers were looking at the following criteria:

  • If the work meets SR&ED definitions;
  • If the work was at risk of “not being SR&ED in a material sense”;
  • If more information or an additional review is needed.

At this point, many claims are accepted, but sometimes additional documentation is required, the CRA stated.

Additional Information for SR&ED

If the CRA is not satisfied with the form description, the next step is usually a site visit to where the claimant did the SR&ED work.

“The CRA will want to discuss the claimant’s understanding of the program, the method used to segregate the SR&ED from the non-SR&ED and how the claim was prepared,” the CRA stated.

Should more information be required, the CRA provided a list of documentation examples it would seek, including photographs, planning documents, reports concerning addressing unexpected obstacles, lab notebooks and minutes of meetings. The notice added that the CRA would try to be flexible in its requests for documentation.

The CRA urged applicants to work with its “client-focused services” during claims to ensure the easiest review possible.

“These services provide opportunities for the CRA and the claimant to work together to determine what specific methods of support may be appropriate for the nature of the work performed or to be performed,” the notice stated.

“Use of these services will further facilitate efficient preparation and review of the SR&ED claims.”

This article is based upon a Government of Canada guide released at the time: Guide to Supporting Technical Aspects of a Scientific Research and Experimental Development (SR&ED) Claim.

 

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