Capturing Foreign Costs

While government sponsored programs in Canada are mainly funding work done in Canada, some foreign based work may be funded also. For example, if you have an SRED eligible project, a small percentage of your wage costs can be on account of employees outside the country. If you are claiming SRED on the traditional filing basis rather than the proxy basis, travel expenses to get you to a foreign location to attend work done there may be eligible so long as those expenses are for the needs of the project.

The Strategic Innovation Fund will recognize foreign costs to the extent that they do not exceed 15% of the total project costs.

The best thing when examining eligibility of your costs for funding is to not make assumptions. Ask questions.

Filing for the Right Province

Sometimes a company will have project work done in another province than the one in which it is situated. If that is your company, make sure that any SRED claim is filed for the province in which the work was done. For example, a Calgary company that claims SRED work that was done for them by a Kelowna contractor, must file a BC claim form for that work. The Alberta form doesn’t cut it.

Filing the wrong form is not a serious problem if the error is noticed and corrected before the filing deadline, but often a claim is filed close to the 18 month deadline and by the time someone tells the applicant that the provincial credit is not being paid out because the work was not done in the province for which the claim was made, it is past the deadline --- too late to make an effective provincial claim.

SR&ED Claim Reviews

What is the likelihood of changing a CRA reviewer’s mind after they have made a proposal about your claim?  I have seen such a change occur….more than once…..but such a result is a minority outcome.

This is unfortunate because I am increasingly finding that to CRA, SRED is whatever the RTA reviewing the claim says it is. Reviewers have a knack for sending lengthy documented refusals that are very short on technological information and reflect no relevant hands-on experience with the technology that is the context of the claim. Too often I am seeing reviews done by people that display no evidence of technical proficiency in the activities for which the reviewed claim has been made.  At once time I thought that such experiences were isolated, but I have become jaded, and I am forming the impression that perhaps there is an agency wide strategy within CRA to reduce claims and wear out claimants, albeit politely.

This is not to imply that your review will be done by incompetents. There are some very bright reviewers, and some really helpful ones, but the fact that appeals to SRED related assessments are now several times what they were a few years ago should say something about what is happening.  The data at this link is informative: https://www.scitax.com/pdf/Bulletin.55.Statistics.Reveal.Dramatic.Increase.in.SR&ED.Appeals.11-Apr-2014.pdf.