CRA HQ in Ottawa

No, Your Big 4 Accountant Can’t Fix your SR&ED Problem as it Relates to the Canadian Emergency Wage Subsidy

Post by Michael Austin, G6 Marketing Manager

 

No, Your Big 4 Accountant Can’t Fix your SR&ED Problem as it Relates to the Canadian Emergency Wage Subsidy (CEWS)

The topic of big accounting firms and entrusting them with your companies SR&ED claim is a widely misunderstood concept. Paying a premium to a big accounting firm in order to have them handle everything to do with tax and tax credits, intuitively leads one to believe they are getting the best service. This is categorically false, at least as it relates to the SR&ED tax credit program. Firstly, accounting firms inevitably focus on accounting aspects of your SR&ED claim, a claim that, as far as the CRA is concerned, receives merit almost solely based on the technical write-up part of your SR&ED claim, not the accounting specifics. Secondly, although you may be dealing with a senior executive in your communication, the personnel that actually works on your SR&ED claim is at the bottom of the corporate ladder at a Big 4 firm. Oh, and those people actually working on your claim will be DIFFERENT next tax season.  Count on it.  You get to train new people in how your SRED works! Finally, perhaps most counter-intuitively, because so many big 4 claims have been sub-par your SR&ED claim is more likely to be examined for audit when prepared by a Big 4 firm than a dedicated SR&ED consulting firm.

As Canadian businesses become aware of the colossal problem that they will be faced with for their next two to three SR&ED claims due to monies received from the Canadian Emergency Wage Subsidy, many are under the false assumption that the expensive big 4 firm that handles their SR&ED will handle everything appropriately and optimally for them. If one considers unnecessarily grinding down over half of the SR&ED claim to be optimal, then this fallacy would hold some water. However, it can be safely said that companies are not in the business of missing out on tens to hundreds of thousands of dollars in tax credits to which they are entitled.

When the Canadian Emergency Wage Subsidy was officially deemed “government assistance”, the CRA compelled all of the 20 000 Canadian businesses that receive SR&ED tax credits to ensure that there would be no overlap in salaries claimed for the two programs.

The common sentiment has been that this will result in a 65% deduction of SR&ED claims. The logic is that businesses will, with no way to manually disentangle CEWS monies received from every single employee whose salary expenditure also qualifies for SR&ED credits, simply subtract ALL CEWS received from ALL SR&ED to be received due to salary cost, resulting in only the proxy amounts of SR&ED to remain. This is the practice that any big 4 accounting firm will perform, leaving you in good standing with the CRA, but tens to hundreds of thousands of dollars (or even millions) short of what you are entitled to.

G6 Consulting has the first, and so far only, CRA-compliant software in Canada that automatically removes the overlap and only the overlap of SR&ED and CEWS monies received, by only deducting CEWS from SR&ED when there is tangible overlap. This results in an extraordinary difference by allowing businesses to only lose 10% instead of 65% of their SR&ED claim. Here are some case studies that show the impact of the calculator (Link – G6 CEWS-SR&ED Case Studies) Big 4 accounting companies will never develop this software because SR&ED is an afterthought. At G6 Consulting Inc, SR&ED is the only thing we do.  We live by our credo: “Nobody outworks G6, in service to the customer.”

The G6 CEWS-SR&ED Calculator developed by experts of the industry, is free to test, and a license can be obtained for any business for just 25% of the savings that the software will give them over the brute force subtraction method of decimating ones SR&ED claim.

Remember, Big 4 Accountant Can’t Fix your SR&ED claim!  Call G6.