Previously, we discussed the rights and responsibilities of the Claimant and CRA staff, and identified three key resources for review.
In this post, we discuss three steps that can be taken at your local SR&ED office to help resolve an assessment of “ineligible”.
Resolving Issues at the Local Tax Services Offices: A Three Step Process
1. Speak With Your RTA
The first step is to speak with the person reviewing your file. Misunderstandings are frequent and it may be as simple as using the same term with two different understandings of what it means or due to a lack of information.
Ask for a clear assessment in writing so you can better understand the situation. There may be requests from the CRA for more information, to meet with additional staff, or arrange for additional meetings – all of which have varying degrees of effectiveness depending on your reviewer.
Before moving on to the next step, make sure that you have all of the information at your disposal. This allows you to better understand the reasons for the assessment of “ineligible” and discuss them with your RTA. This will allow you – the claimant and taxpayer – an opportunity to respond in writing to any misunderstandings or incorrect applications of the law by providing clear and concise evidence. All of this becomes critical later on. Make sure that everything is in writing and that you provide as much as possible in this format.
In an ideal world, this would work most of the time. Often when a claimant gets a call or receives a draft report which indicates their claim has been denied in full without a clear or comprehensive explanation, the relationship quickly breaks down and this is when the next step is required.
2. Discuss with the Manager
If you seem to be getting nowhere, the next logical step is to identify and contact the Research and Technology Manager (RTM) and/or Financial Review Manager (FRM). Calling the local SR&ED office and asking for the name and contact information for the RTM/FRM is the most efficient way to get this information.
The outcome of this stage will depend on the manager that has been assigned to the file. As with any department, some are more helpful than others. Keep an open mind and communicate in writing.
If you haven’t received a clear explanation of why your work has been deemed ineligible, it is appropriate to address your concerns to the RTM. Should you not be able to receive an explanation from the RTM that meets your rights as a taxpayer, it is important to consider the next steps.
3. Request an Administrative Second Review (ASR)
This is where things start to get interesting, and most companies are not aware that this process exists or how best to access it (despite the requirement for RTAs to notify the taxpayer of recourses available to them).
Even if there are errors in the processing of your claim, an ASR does not provide a new ruling with regards to the eligibility – instead, it (potentially) provides a second opportunity to provide new information.
Many feel that this step does not provide any value unless there have been serious errors on the part of the RTA in the processing of your claim. Take time to understand the mindset of the CRA, it is helpful to also think about the work environment. If you disagree with your peers on a decision, how will that reflect upon both of you? Unlike the private sector where people transition from one job to another regularly, government employees are often part of the same team for an extended period of time.
Whether or not you have received an Administrative Second Review and reached your desired conclusion, you will receive a Notice of Assessment (NoA). This will summarize the SR&ED investment tax credits (ITCs) allowed or disallowed based on the findings of the reviews.
…or is it?
If the claimant does not agree with the NoA, regardless of whether they received an Administrative Second Review, the claimant has the option of filing an objection within 90 days of the date of the NoA. This process is handled by the Appeals Branch of the CRA.
These next steps – and some of the controversy around them – will be discussed in our next post.