How Long Does It Take to Receive the SR&ED Tax Credit?

How Long Does It Take to Receive the SR&ED Tax Credit? And the answer to this question is that the time it takes to receive SR&ED tax credit in Canada can vary depending on several factors, including the type of business, the completeness and accuracy of the claim, and the processing time at the Canada Revenue Agency (CRA). In this blog, we’ll provide a comprehensive overview of how long it typically takes to receive the SR&ED tax credit and offer tips to expedite the process.

Factors Affecting Processing Time

Many factors affect how long it takes to get your SR&ED tax credit. Knowing these factors can help you set realistic expectations and take steps to speed up the process. Here are the key factors:

Type of Business

The type of business filing the SR&ED claim significantly affects how long the processing will take. Different types of businesses have distinct timelines based on their specific circumstances:

  • Corporations: For corporate entities, the processing time is generally quicker for refund claims. The CRA tries to process these within 120 days from when they receive the claim. However, if the corporation is claiming an amount to be applied against taxes payable, the processing time can extend up to 365 days. This is because claims against taxes payable often require more detailed scrutiny to ensure compliance with tax regulations.
  • Individuals and Trusts: Claims made by individuals or trusts usually have a longer processing timeline. The CRA tries to process these claims within 180 days from when they are received. This extended period accounts for the additional review and verification processes required for non-corporate entities.

Claim Completeness

The completeness and accuracy of your SR&ED claim are critical factors that can significantly impact processing time:

  • Accurate Documentation: Submitting a claim with accurate and detailed documentation helps streamline the review process. This includes thorough records of your R&D activities, detailed project descriptions, and precise financial information regarding your expenditures.
  • Completeness: Make sure you include all the necessary forms and papers with your submission to avoid any issues with plagiarism. Missing information or incomplete documentation can lead to delays as the CRA may request additional details, prolonging the review period.
  • Clear Justification: Providing clear and concise justifications for the eligibility of your projects under the SR&ED program can help expedite the CRA’s review. Well-documented claims with robust evidence of scientific research and experimental development activities are less likely to be flagged for further review or audit.

CRA Workload

The current workload and internal processes of the Canada Revenue Agency (CRA) also play a significant role in determining how quickly your SR&ED claim is processed:

  • Seasonal Variations: The CRA’s workload can vary throughout the year. For example, periods close to major tax deadlines often see higher volumes of submissions, which can slow down the processing times for all claims, including SR&ED.
  • Resource Allocation: The CRA decides how to distribute its resources by looking at how many claims they get and how complicated they are. During periods of high submission volume, such as the tax filing season, the CRA may have to distribute its resources across various types of claims, potentially leading to longer processing times for SR&ED claims.
  • Backlog Management: The CRA continuously works to manage and reduce backlogs. However, unexpected increases in the number of claims or changes in policy and regulatory requirements can impact their ability to process claims quickly.

General Timelines

Here are the specific processing times for different types of entities:

Corporations

The timelines for corporations vary depending on the nature of the SR&ED claim:

  • Refund Claims:
    • Processing Time: The Canada Revenue Agency (CRA) aims to process SR&ED refund claims for corporations within 120 calendar days from the date of receipt.
    • Explanation: Refund claims are typically processed faster because they directly involve issuing funds back to the corporation. The CRA prioritizes these claims to ensure businesses receive their refunds promptly, thereby supporting their ongoing R&D activities.
  • Claims Against Taxes Payable:
    • Processing Time: For claims where the SR&ED credit is to be applied against taxes payable, the processing time can extend up to 365 days from the date of receipt.
    • Explanation: These claims take longer as they require a more thorough review to ensure that the credits are correctly applied against the corporation’s tax liabilities. This involves verifying the accuracy of the claimed expenses and ensuring compliance with tax regulations, which can be more complex and time-consuming than processing a straightforward refund.

Individuals and Trusts

The processing timelines for SR&ED claims made by individuals and trusts are generally longer:

  • General Processing Time:
    • Processing Time: The CRA generally processes SR&ED claims for individuals and trusts within 180 calendar days from the date of receipt.
    • Explanation: Individual and trust claims often involve more detailed personal financial information and require additional verification steps. The longer processing time accounts for the need to review personal tax situations and ensure that the SR&ED credits are correctly applied.

Factors Influencing Timelines

While the CRA provides these general timelines, actual processing times can vary based on several factors, such as:

  • Claim Completeness: Claims that are complete and well-documented tend to be processed faster. Missing information or unclear documentation can result in delays.
  • CRA Workload: The CRA’s workload can impact processing times. During peak periods, such as tax season, or when there is a high volume of SR&ED claims, processing times may be longer.
  • Complexity of the Claim: More complex claims that involve large projects, multiple activities, or intricate financial details may take longer to review and process.

Detailed Review and Audit

Occasionally, the CRA may select your claim for a detailed review or audit. This could make it take much longer to handle, depending on how complicated the request is and how much paperwork you give us. Here’s what to expect:

  • Review Process: The CRA may request additional information to verify the eligibility and accuracy of your claim.
  • Audit Process: An audit involves a more in-depth examination of your claim, including site visits and interviews with personnel.

Tips to Expedite Your Claim

To help ensure your SR&ED claim is processed as quickly as possible, consider these tips:

  • Ensure Completeness and Accuracy: Make sure everything needed is there and correct.
  • Provide Thorough Documentation: Detailed records of your R&D activities, expenses, and project descriptions can help speed up the review process.
  • Respond Promptly to CRA Requests: Timely responses to any CRA inquiries or requests for additional information can prevent unnecessary delays.

What to Do If There Are Delays

If you experience delays in receiving your SR&ED tax credit, take the following steps:

  • Follow Up with the CRA: Get in touch with the CRA to check on your claim and find out if there are any problems causing it to take longer than expected.
  • Seek Professional Advice: At G6 Consulting Inc., we are here to assist you. Our experts can help address any issues and expedite the resolution process.

Conclusion

At G6 Consulting Inc., our goal is to help you navigate the SR&ED tax credit process efficiently. By understanding the timelines and taking proactive steps, you can minimize delays and ensure timely access to your credits. For personalized assistance with your SR&ED claim, contact us today.

For more information and resources on the SR&ED program, visit the CRA website or reach out to our team at G6 Consulting. We’re committed to assisting you in getting the most out of your SR&ED tax credits and reaching your innovation targets.

Get your SR&ED done right with G6 Consulting Inc – Canada’s R&D Tax Credit Experts!

G6 Consulting can work with you to build your claim, co-ordinate with your accountant, submit your claim and get you your cheque. No cost until you get paid

Check out our SR&ED overview page to learn more about SR&ED and how to qualify

Contact an Expert for a free no obligation consultation to see if your business can qualify

Check out our SR&ED calculator to get an idea of how big your SR&ED cheque could be

What Happens If My SR&ED Claim Is Audited
How Long Does It Take to Receive the SR&ED Tax Credit?