No matter how big or small, every step you take towards advancing science, whether through new and innovative products, or even small improvements to processes can qualify you for Scientific Research and Experimental Development (SR&ED) tax incentives from the Federal Government.
To facilitate a smooth SR&ED claim, the Canada Revenue Agency (CRA) hosts pre-claim consultations. Much like the actual claims process, the consultation also requires meeting eligibility requirements and necessary documents, which SR&ED consultants in Toronto can help you with.
What is a Pre-claim Consultation?
During a pre-claim consultation, the CRA will determine if you performed substantial work in any of your projects in the last year that qualifies for a SR&ED claim. The CRA will also provide recommendations and advice to facilitate a smooth claims process. Essentially, this phase determines if you can proceed with the actual SR&ED claim.
To qualify for a pre-claim consultation, you must have the basic requirements for claiming SR&ED on hand. This includes an income tax return along with Form T661 (SR&ED Expenditures Claim), and either the Form T2SCH31 for Investment Tax Credit for Corporations, or Form T2038(IND) for individuals. It also helps to be prepared with supporting documentation required in the claims process, such as project plans, experiment designs, technical drawings, and so on.
You must also ensure that the projects you are requesting a consultation for must be completed or in progress; have not yet been reviewed and given an eligibility determination; and do not involve an issue that is under notice of objection or in litigation. The consultation must be requested within four months of the close of the tax year in which you performed SR&ED work. To ensure that you meet this timeline, and that the projects you submit are eligible, you can meet with SR&ED consultants in Toronto who can help with the necessary documentation.
What Happens in a Pre-Claim Consultation?
The information you provide and submit to the CRA will determine if there is enough SR&ED work that merits a pre-claim consultation to aid you in the claims process. Based on what you provide, SR&ED reviewers will:
- Identify the scientific research and development work that qualifies as SR&ED;
- Provide advice regarding supporting documents you need to keep;
- Answer your questions, and offer advice and recommendations for a better outcome; and
- Provide a decision in a written report that identifies which work you performed qualifies for SR&ED tax incentives, but does not detail decisions on the extent of eligible work, or allowable expenditures.
Before proceeding with the consultation, SR&ED consultants can screen the work your business or research facility undertook in Toronto, to ensure that the CRA’s SR&ED reviewers will find that you meet the eligibility requirements for claims to be processed.
How to Ask for a Pre-claim Consultation
To ask for and be granted a pre-claim consultation, you must complete and send an online pre-claim consultation request form. After sending a completed form, you will receive a call from a Canada Revenue Agency (CRA) officer to collect more information that will help the CRA decide if the SR&ED work you performed qualifies for a consultation.
When filing the request for a consultation, as well as during your conversation with the CRA officer, make sure to give the same contact and business information. As you will be asked questions to help the CRA determine your eligibility for a consultation, it helps to have your business and project information on hand to make it easier to respond to the officer’s questions.
To prepare for the consultation, and ensure a smooth claims process, you can seek the expert advice and help of SR&ED consultants in Toronto. SR&ED consultants can pre-screen your eligibility, compile necessary documents, and provide ongoing support in your dealings with the CRA.