Explosion of CRA auditing of SR&ED applications: endless extension of processing times

Magnifying glass focusing on the word inspection

The SR&ED credit program attracts many companies operating in various sectors, from IT through life sciences to manufacturing. Rather than accelerating the processing of inspections, which are becoming ever more numerous, by boosting its teams, the Canada Revenue Agency seems to have adopted a strategy of extending processing times.

Is the CRA further removed from the reality of companies that develop R&D ? This is the question that comes to mind upon considering the new requirements which have to be met by companies which are not always prepared to do so. The government’s scientific research and experimental development program has been refined over the last thirty years, becoming more precise, but also, more complex. Out of necessity, an entire industry of consultants has grown to help companies. For the last two years, the industry has seen a real explosion in the number of verifications, as well as cuts, which are sometimes huge. On top of this, processing times for claims has been increasing. This can easily be explained: not only does the Canada Revenue Agency impose stricter criteria, it also lacks adequate human resources. The result? An extension of response times, which sometimes take up to a whole year! This can be clearly damaging to a start-up and its cash flow. To survive this severe blow, some companies turn to the services of specialised tax credit pre-financing companies, such as R&D Capital.

An ever increasing number of companies which used to prepare their SR&ED statements by themselves are receiving a letter from tax authorities informing them that they have to undergo an eligibility examination. This audit can easily become a nightmare. With the government’s requirements becoming even more stringent, some companies are simply unable to cope. Today, technological projects which would have been easily accepted in the past are rejected. Sometimes, even its cuts reach up to 100%! This means a total loss for the company.

Due to this radical hardening of the position of the CRA, R&D firms of all sizes are discouraged and just give up. They simply abandon the program, setting aside thousands of dollars owed to them. Others, on the contrary, decide to take the bull by the horns and seek the help of professionals. These SR&ED tax credit consultants have acquired enough expertise to make all the difference. Such is the case with Emergex SR&ED Subsidies which, thanks to its technology and taxation experts, is capable of taking charge of the entire SR&ED tax credit claim procedure, while rapidly adapting itself to constantly evolving constraints. Emergex can equally take over a problematic file prepared by another resource, and then rework and realign it so as to defend it during examination by the Canada Revenue Agency’s auditors. As Pierre Savignac, President and Founder of Emergex SR&ED Subsidies, which also claims e-business development tax credits (CDAE), explains, “An increasing number of companies are coming to us for help with their CRA inspections“.

With the hours and hours that must be devoted to each SR&ED tax claim, the CRA’s ever more stringent requirements, the increase in the number of verifications, endless processing delays, Revenue Canada seems to be moving further away from the realities of SMEs, whereas this grants programs is intended for them. SR&ED professionals firms offer a secure and effective solution for innovative companies.

For more information: www.emergex.com | Montreal 514.765.3333 | Quebec 418.907.9254 | Toronto 905.849.3033

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The main real advantages we have had by entrusting our R&D claims to Emergex are their rigorous analysis and preparation of scientific documentation, their ongoing support throughout the process, and significant time saved.