Frequently Asked Questions
What can we get compensated for?
You can receive a refund for salaries, contracts for SR&ED work done on your behalf, payments to universities or to research institutes, materials and overhead expenses.
Why do people get bogged down preparing their SR&ED tax credit claim?
- Lack of planning - something that gets rushed during tax season
- SR&ED is not equal to R&D. Claimants are often too close to their products (it’s their baby!) and fail to objectively describe the critical aspects of SR&ED reporting.
- People are product-centric in their thinking/writing. SR&ED is not about features, it is about what you did to the technology as opposed to with the technology.
- Lack of strong processes to compile the technical story and project costing.
- You’re running a business! SRED work is often filed in the LATER bin.
What are the top reasons why claims fail?
- SR&ED report does not properly answer the 3 CRA questions:
i) was there scientific/technological uncertainty;
ii) was there systematic investigation;
iii) was there a scientific/technological advancement.
The report lacks clarity, doesn’t communicate the story well – the dots are not connected.
- Lack of supporting documents (technical and financial)
- Description is too product- and commercialization-centric, as opposed to technical. Or, the work sounds like routine development. The CRA wants you to make it very clear why research and experimentation was required.
- Costs claims not supported by events described. The technical activities in your SR&ED story needs to jive with the claimed cost. For example, if you claim $100,000 of material costs like plastic resin for injection moulding, you must emphasize in the work-done section that a lot of resin materials were tested or used in a process, etc. Otherwise? Red flag.
- In an audit, you don't know how to justify your project in front of the CRA auditors with project-supporting documents, CRA policies and tax law.
How does Engineva price SR&ED engagements?
We offer 3 alternatives. For each, the complete Engineva package (claim preparation, tax filing and CRA audit support) is available.
- Risk-free: Many of our client agreements are success-based – we don’t get paid until you do.
- Flat rate: Some clients prefer flat-rate.
- Hybrid: A combination of the above two options.
Why is it a bad idea to use percentages to estimate the amount of SR&ED work?
Many SR&ED preparers use percentages on your claim, e.g. 30% of all Mark’s work was for SR&ED. While it seems easier at the time, it can raise a red flag, and it is very difficult to defend in the event of an audit. There are better ways – connect with us if you’d like to know more.