SR&ED Procedures and Guidelines, Summarized

It can be overwhelming visiting the CRA SR&ED Program policies & procedures website, where the information is sorted alphabetically and it’s often unclear which procedures and guidelines are “must-reads” for technical vs. financial individuals. As this might seem daunting to someone first entering the world of SR&ED, we’ve created short summaries for each part of the CRA policies page, to help users quickly find the information they require.

Italicized text indicates a direct quotation from the related CRA SR&ED procedure or guideline.

Technical – Procedures and Guidelines

Guidelines on the eligibility of work for scientific research and experimental development (SR&ED) tax incentives

Scientific research and experimental development (SR&ED) is:

“A systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis.”

There are three distinct categories of SR&ED: basic research, applied research, and experimental development. These guidelines replaced the Eligibility of Work for SR&ED Investment Tax Credits Policy in August 2021 and are used to help companies determine if their work or a portion of their work is eligible for SR&ED investment tax credits. It examines the “how and “why” requirements for work to be eligible, the categories of eligible and ineligible work, and what is considered support work.

Read this policy if you require clarification of what work constitutes SR&ED.

SR&ED claims made by physicians and Medical Professional Corporations – Information for claimants

This document recognizes that work involving medical research generally meets the eligibility criteria of the SR&ED program as it contributes to new discoveries and advancements of medical knowledge. However, determining who can claim the work is sometimes difficult because of the collaboration between parties, for example, physicians, medical professional corporations (MPC), health care entities (HCE), etc. The purpose of this information is to help physicians and MPCs prepare their SR&ED claims, including how to determine who the ‘performer’ of the SR&ED is and what documentation is helpful and recommended for SR&ED within medical research.

“The CRA recommends that all agreements be in writing. Where no written agreement exists, other evidence should demonstrate which party is legally bound to provide the medical services and perform the research.”

Read this policy if you are operating within the medical sector to confirm whether you are properly claiming all of the work that is eligible for SR&ED tax incentives.

Financial – Procedures and Guidelines

Guidance: How the Canada emergency wage subsidy affects SR&ED claims

As a result of the COVID-19 pandemic the Government of Canada began providing support to Canadian businesses. The Canada emergency wage subsidy (CEWS) is one such support and is available to eligible employers to help keep, or rehire, employees. All government assistance received, including CEWS and the temporary wage subsidy (TWS), reduces a claimants’ pool of deductible SR&ED expenditures. This document provides guidance to claimants and other stakeholders on how CEWS affects SR&ED claims, and how CEWS and TWS should be calculated and applied to a claimants’ SR&ED forms.

“The CEWS received or receivable for an expenditure of a taxpayer that may be a qualified SR&ED expenditure is considered assistance in respect of SR&ED.”

Read this policy if you received CEWS or TWS assistance during the tax year.

SR&ED Reviews – Procedure and Guidelines

Financial Claim Review Manual – Review Procedures for Financial Reviewers

The Financial Claim Review Manual (CRM) was published by the CRA as a guide for the Financial Reviewer (FR) in planning, coordinating with the research and technology advisors (RTA), and conducting & documenting the review of claims. The purpose of these procedures is to help enhance the consistency and quality of the review of SR&ED claims among FRs nationally:

“The guidance provided in this document is intended to ensure that reviews are conducted as efficiently and effectively as possible without compromising the CRA values of integrity, professionalism, respect, and co-operation and, while adhering to CRA security and other policies, providing due process to the claimant, and protecting the confidentiality of claimant information.”

Read this policy if your claim has been selected for a financial review to gain an in-depth understanding of what to expect from the financial reviewer involved.

Claim Review Manual for Research and Technology Advisors

The Claim Review Manual (CRM) for RTAs was published by the CRA, and is a comprehensive set of procedures for RTAs to perform the technical review of SR&ED claims. It serves as a complete guide for the RTA in planning, coordinating (with FRs), and conducting & documenting the review of claims. The purpose of these procedures is to help enhance the consistency and quality of the review of SR&ED claims among RTAs nationally.

“By providing the means for consistent and fair treatment of SR&ED claims nationally, the CRM will help ensure that claimants receive their full entitlement allowed under the Income Tax Act. To improve the level of service to claimants, these procedures emphasize working with, informing and educating claimants on the many aspects of the SR&ED program.”

Read this policy if your claim has been selected for a technical review to gain an in-depth understanding of what to expect from the research and technology advisor involved.

The SR&ED Technical Review: A Guide for Claimants

The CRM documents (both financial and technical) are useful in gaining an understanding of how an SR&ED review will proceed, and what the reviewers (FR and RTA) purpose and focus will be on throughout, however, the SR&ED Technical Review: A Guide for Claimants is written specifically for the taxpayer to help them better prepare for the technical review:

“The SR&ED Technical Review: A Guide for Claimants:

  • summarizes the procedural steps that an RTA is expected to follow in completing a technical review, when a claim is selected for a detailed technical review;
  • outlines how RTAs will work with claimants and how claimants can work with RTAs during the review process; and
  • identifies best practices that claimants and RTAs can adopt to ease the review process.”

Read this policy if your SR&ED claim has been selected for review to gain a better understanding of what to expect and how to prepare.

General Guidelines and Procedures

Guidelines for resolving claimants’ SR&ED concerns

To ensure that all SR&ED claimants’ concerns are addressed in a fair and timely manner the CRA created these guidelines which detail the steps to resolving claimants’ SR&ED concerns. The document details the roles and responsibilities of the claimant, the Research and Technology Advisor and the Financial Reviewer. It also discusses the process of resolving claimants’ concerns that may arise during the various stages of processing an SR&ED claim.

Read this policy if any concerns arise during your SR&ED claim review.