In an article published in The Globe and Mail, we learn that the number of notices of opposition by tax payers claiming SR&ED credits has increased by a factor of 25 between 2007 and 2014. It is a direct result of measures to tighten the program started by the Canada Revenue Agency in 2008. The notice of opposition an administrative mechanism which allows a tax payer to object to a decision taken by the Agency, and is a required first-step before suing the CRA at the Tax Court of Canada.
In the last few years, the CRA has increased its requirements relating to documentation and to following the scientific method during SR&ED projects. The new audit procedure reflects this approach with the use of the five key questions.
Another sign of the increased difficulty of claiming SR&ED credits is the number of new cases in front of the Tax Court of Canada. In 2014, it jumped to 42 from only 20 in 2012. In total, it’s 80 cases regarding SR&ED that are waiting at the tribunal.
To avoid being a victim of these statistics, it is important to put in place a good work methodology, including maintaining sufficient documentation and hypotheses and hours logs. Do not hesitate to contact Emergex for any help. We offer, at no charge, a specially designed timesheet system to compile SR&ED activities and hours.
Pierre Savignac has been the CEO and Founder of Emergex SR&ED Consultants since its inception 30+ years ago. He earned a bachelor’s degree in computer science from University of Montreal in Quebec, Canada, followed by a certificate in four languages and thousands of hours of professional education. He has worked in the field of information technologies for 40 years and has helped over a thousand companies claim $500 million in SR&ED tax credits with a 98% success rate.
