Updates to SR&ED Program

SR&ED Program Updates: July-September 2019

This post outlines the updates to the program from July to September 2019, including administrative, policy, tax law, and court cases. We have identified some key trends to watch in the SR&ED environment.

Administrative, Policy, and Legislative

The third quarter of 2019 brought some SR&ED news and information updates from CRA. While the program and policies remained constant, the CRA did release two informative articles about the program, detailed below.

The CRA posted two updates, both on July 25th on their “What’s New – SR&ED Program” website.

The Summary of provincial & territorial R&D tax credits as at March 31, 2019 provides detailed calculations and information regarding each provincial or territorial tax credit. It indicates who can apply, and provides information on the base expenditures, eligible work expenditures, filing deadlines, carry back/forward (if applicable), assistance, recapture, the ability to renounce, as well as links to relevant forms, legislation and the provincial website.

The CRA also prepared the Federal SR&ED legislative proposals status as at June 30, 2019 table, which tracks the progress of any outstanding federal draft legislation amendments to the Income Tax Act that would potentially impact the SR&ED program. 

Judicial Proceedings

In terms of judicial proceedings, Q3 was quiet with only one court ruling on the docket.

Clevor Technologies v. The Queen 

The Appellant appealed a reassessment of their SR&ED investment tax credit claim for the 2013 taxation year.  The Appellant claimed two projects were eligible for SR&ED investment tax credits during this taxation year.  The first project involved a “Clevor Schedule Optimizer” (CSO) which helps companies determine the most efficient schedule to complete projects.  The program interface for the CSO was changed which, in turn, forced the Appellant to change the code of the CSO for the two programs to integrate.  The judge ruled that the Appellant’s approach to systematically try various combinations of code was “trial and error” and, therefore, not an SR&ED eligible project.  The second project was “work seeking to incorporate the ‘best lateness and overhead calculation’ to enhance CSO’s ability to calculate optimal timelines for concurrently run projects.”  The judge ruled that the Appellant failed to prove there was any technological uncertainty for this project and, therefore, it was not an SR&ED eligible project.  The case was dismissed. 

It should be noted that this was an unusual case, as the president of the Appellant is deceased and the daughter – who does not have formal computer or software development training and had not been employed by the Appellant at any relevant time – was the sole witness despite having no personal or direct knowledge of the Appellant’s activities in 2013 relevant to this appeal. It was left unexplained why the Appellant did not call to testify any current or former employees of the Appellant who had had any significant involvement in the Appellant’s activities in 2013 underlying this SR&ED claim.

For more details and analysis, you can view our complete analysis of Clevor Technologies v. The Queen.

SREDucation Articles

SREDucation spent the July – September summer months drilling down into the forms to explain the various key lines in our blog posts, in the interest of further de-demystifying the application process for researchers and claimants.

Following along the success of our Q2 blogs, we continued to focus on questions that our clients frequently ask during the course of the SR&ED claim process. These delve into topics of interest and serve to demystify the SR&ED application process for prospective claimants. We took a deep dive into the form T661 to provide some additional guidance and insight for future claimants. 

To begin with, we explain how to write a captivating project title because you don’t get a second chance to make a good first impression! SR&ED Project Titles: First Impressions Matter (line 200). For researchers using SR&ED contractors to assist with claim preparation, we have outlined the importance of lines 267, 268 and 269. Finally, we suggest that you fully explain the project in Work Performed: Making sure you include enough detail (line 244). 

Summary of SR&ED Updates

As in the prior three months, we continued our educational mandate, writing three more informative blog posts to help our organizations with their questions. We also added one more example to our judicial summaries to illustrate what can happen during the appeals process.  Check back at the end of the year to see what SR&ED in the last three months looked like after the election and to get a glimpse of SR&ED trends that we are watching for 2020.

Share your thoughts on the recent SR&ED program updates by commenting below, or adding to the conversation in our LinkedIn group, Facebook page or via Twitter.
Or even better, sign up for the Comprehensive Guide to SR&ED

Note: The Legal Rulings Database is available to SR&ED Education and Resources Master Members. 


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