Just like most of our day to day routines, the pandemic has caused changes in the administration of the government’s SR&ED program too. The largest change is that the government has suspended audits for the duration of the pandemic.
This no-audit policy means that for existing SR&ED clients, claims are being processed very quickly, generally in less than a week. The government states that it wants to get SR&ED money into the hands of deserving clients as fast as possible as part of its general stimulus efforts. Great news! If you have claimed SR&ED successfully in the past but not in recent years, this is an excellent time to claim.
The pandemic no-audit policy effect for first time SR&ED claimants is more muddled. A few years ago, the feds announced a new policy whereby all first-time claimants would receive a SR&ED onsite review upon submitting their first claim. This policy was not as harsh as it sounded. At the same time, the government expanded an existing program called FTCAS – First Time Claimant Advisory Service. Certain first-time claims that looked good to the government were given FTCAS status. This meant that the claims were approved. In SR&ED lingo, this is called “accepted as filed”. The government still scheduled a review with the FTCAS client to deliver general SR&ED education, give general commentary about strengthening record-keeping for SR&ED and critiquing the SR&ED submitted with a view to strengthening future claims.
So, you can see a Catch-22 here. All first-time claims must be reviewed, or at least FTCAS’ed. But the government is not doing any onsite visits during the pandemic. Logjam. Luckily, we have been able to get first time claims approved.
The government has something called service standards for various different operations it performs. The government has a service standard to review CCPC SR&ED claims within 60 days. The government’s service standard starts when they hit the stopwatch button not when you submit a claim. You can see when the service standard starts for your claim by using CRA’s MyAccount service. Log onto MyAccount, go down to the Corporation Income Tax section and select the “View return status” bullet. This will call up a chart with the status of various tax year ends. Look for the year end entry for the tax year for which you just submitted the SR&ED claim.If there is a recent entry, it probably has a status which says: “Initial Assessment Received” followed by a date in the last column. There is your date which the government uses to calculate the start of the service standard window for processing your claim. The government won’t field inquiries about specific claims before the service standard has been exceeded. So, put a date in your calendar to call the govt 60 days + 1 after the date we just found. This presumes that the government doesn’t call you first to set up a SRED review. When you call the government about your SR&ED claim, you do not call your T2 tax processing center. You call the local SR&ED office which handles claims for your geography. You can find your office and its co-ordinates here: https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/contacts.html When you call the local SR&ED office you have the opportunity to plead your case to get the government to prioritize your claim.
Some SRED reporting deadlines have been extended due to COVID-19. See here for the details: https://www.g6consulting.ca/sred-claiming-deadlines-extended-due-to-covid-19/
Call G6 Consulting for help to efficiently manage your SRED claim during the Covid-19 pandemic.