Experiences at CRA SR&ED Information Seminars (Part 1 of 2)
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Throughout the year, the CRA offers a number of educational seminars in which they provide information about Canada’s SR&ED program. The seminars take place in metropolitan centres across the country and are completely free and open to all interested members of the public/private sector. The CRA posts a schedule of these events on their website here.
This first post will focus on the ‘Public General Information Seminar’, a seminar that is supposed to be targeted at users with limited knowledge of the program. But are these SR&ED information seminars a worthwhile time investment? Read on to learn about the seminar structure and some of my criticisms and suggestions for improvement.
Introduction & Services
The first part of the presentation was given by the local SR&ED coordinator for the Ottawa area. In the first 30 minutes or so, he provided general information on the project and its goals. Most of what he talked about could be found out by simple Google searches (or by reading SREDucation!), but it provided a good baseline for the rest of the presentation. He also mentioned additional services offered by the SR&ED office (beyond simply providing successful companies with a cheque). Some highlights that I took away from his talk included:
- Promoting PCPR: The Pre-Claim Project Review is a free service which allows the CRA to offer non-binding recommendations to a company before they submit a claim.
- Downplaying Other Services: In his explanation and response to follow-up questions, the coordinator seemed to brush over the First-Time Claimant Service (FTCS) and the Account Executive Service (AE). He said that the FTCS is not normally completed but will be if requested. He also initially suggested that the AE program is intended for larger companies, though later backtracked to say that it is open to all established claimants.
- Self-Assessment Tool: He mentioned and provided a link to the ESAT (see our mention of it here), and described it as a useful tool. It may be getting an upgrade in the near future, but that remains to be seen.
Tip: You can learn more about these CRA services by consulting pages 15 – 16 of the CRA’s Overview of the SR&ED Tax Incentive Program guide.
SR&ED Technical Eligibility
The second portion of the talk was given by a local RTA. He covered the eligibility requirements of the program and gave a very brief overview about the kind of documentation he likes to see. It was refreshing to get an RTA’s direct perspective of the program, though I did find his presentation style aggressive. It was clear he had a high level of familiarity with the program, but the presentation wasn’t catered to the less familiar of the audience members. However, some interesting highlights of his talk included:
- A definition of ‘Technology Base’: He re-emphasized that technological advancements come based on the ‘technology base’ of the company i.e. NOT from the total knowledge of technology as a whole. This was a welcome re-iteration considering the recent shifts in CRA policy that came to light during the SR&ED Stakeholders Meeting (you can read our summary and initial reaction to the meeting). He also re-iterated that advancements can be incremental in nature, as long as the work performed is eligible.
- Support Activities: The presenter also emphasized that SR&ED support activities (more info here) can only be classified under 8 specific types–engineering, design, computer programming, data collection, testing, operations research, mathematical analysis, psychological research. He did, however, explain that the ‘engineering’, ‘design’ and ‘computer programming’ designations are necessarily broad (so as to not be excessively limiting).
Explanation of the T661
The explanation of the T661 form was the aspect of the presentation that I was most looking forward to, as the T661 filing is often the most confusing part of the whole application process. I was wondering if the CRA would do a good job of clearing up some of the confusion regarding this form. The answer, I’m afraid to say, is a resounding ‘no’.
The information presented in this section was rushed in some places, over-presented in others, and resulted in a somewhat muddled explanation that would have confused anyone not already familiar with the program. A quick look around the room revealed plenty of perplexed frowns throughout the presentation. My primary criticism of this portion of the presentation was that it dwelled on minutia such as the change history of the T661, word count limits and other small issues that require very little time or thought on the claimant’s part. As a result, the description of the technical narrative and how it should be written/structured was extremely brief and provided no guidance aside from one or two comments.
During the break, I got a chance to chat with attendees as well as the RTAs who were attending the presentation. One thing that I noticed was that the RTAs in attendance were all very friendly and willing to answer any additional questions that you might have about the program, whether it was related to the presentation or not. Although it would have been nice to see this open format environment reflected in the seminar itself, kudos to the RTAs for making themselves available.
SR&ED Financial Info
The second half of the presentation was given by a senior Financial Reviewer at the CRA office. Overall, I found the presentation to be extremely helpful, informative and well-presented. The first portion briefly covered the financial components of the T661, however, as he explained, there simply wasn’t enough time to go into the details of each tax line, indicating that more information would be provided at a future seminar.
The second portion of the seminar was probably the most interesting part of the entire presentation for the general attendees. The presenter discussed the eligible costs that are claimable under SR&ED guidelines. There was a lot of information to cover, but details of each eligible cost (he separated them into Salaries, Contractor, Materials and Lease/Capital costs) were explained. My favourite part of all of this was that he punctuated each section with common examples of eligible (and ineligible) claim amounts that he sees on a regular basis. Even I learned something: patent costs aren’t eligible for SR&ED. However, it should be noted that patenting SR&ED-eligible work can add a competitive edge to your product, a topic which we explored in our Software Patents & SR&ED guest post series.
In just 15 minutes, the ITA provided an excellent overview of the program, emphasizing its interaction with SR&ED. As explained by his ITA, IRAP can provide indirect increased eligibility for SR&ED, though the assistance must be deducted from the SR&ED refund. He also demonstrated that IRAP provides more than just financial support–the program has an extensive national (and international) network of research experts and professionals that they can connect with program applicants to provide support in other ways. I thoroughly enjoyed this part of the presentation and learned quite a bit from the seminar. Keep checking back with SREDucation for a future post about IRAP.
Overall, I think that the CRA’s SR&ED information seminars are definitely worth attending, though perhaps not as your first introduction to the program, considering how rapidly the information is presented. Based off of this seminar, I would recommend that first time claimants perform a bit of background research into the SR&ED tax incentive program first and prepare a list of questions that you are not sure about or are specific to your business and then attend one of the seminars.
Hopefully, the CRA will improve their presentation so that this isn’t necessary for the future. However, as stated above, if your questions don’t get answered directly in the presentation, the RTAs are all available in-person to answer your questions during breaks. Alternately, you can reach the RTA’s at their public contact number–but there really isn’t any substitute for personal interaction. We also offer an increasingly expanding pool of informational articles here at SREDucation, so if you want to impress an RTA as a first-time claimant, take some time to navigate through our site’s resources and look out for part 2 of my Experiences at CRA SR&ED Information Seminars in the new year.