Guidelines for resolving claimants’ SR&ED concerns

Number: SR&ED 2000-02R3
Date: May 30, 2016
Subject: Guidelines for resolving claimants' SR&ED concerns

Table of contents

• 1. Introduction
• 2. Roles and Responsibilities
  
  • 2.1. Claimant
  • 2.2. Research and Technology Advisor
  • 2.3. Financial Reviewer
• 3. Resolving Concerns
  
  • 3.1. Concerns Regarding the Filing Requirements
  • 3.2. Concerns with a Review
  • 3.3. Appeals Process
• 4. Contact Information
• Appendix A: Explanation of changes

1. Introduction

The Canada Revenue Agency (CRA) is committed to providing fair treatment to all claimants of the Scientific Research and Experimental Development (SR&ED) tax incentive program. In keeping with this commitment, guidelines have been established to ensure that SR&ED claimants' concerns are addressed in a fair and timely manner. This application policy details the steps to resolving claimants' SR&ED concerns and it is meant to benefit all concerned parties: SR&ED claimants, the CRA and other stakeholders.

This policy replaces Application Policy SR&ED 2000-02R dated June 30, 2005.

2. Roles and Responsibilities

The effective processing of an SR&ED claim requires open communication and cooperation between the claimant, the Research and Technology Advisor and the Financial Reviewer. This section defines each party's roles and responsibilities.

2.1. Claimant

The roles and responsibilities of the claimant are to:

• comply with the SR&ED program's requirements;
• prepare and maintain proper technical and financial documentation to support the work and expenditures claimed;
• respond in a timely manner to the SR&ED staff's queries and requests for information;
• provide the SR&ED staff access to the appropriate company representative;
• provide additional information and supporting documentation, as requested by the SR&ED staff, for the work and expenditures claimed; and
• advise the SR&ED staff of any concerns, as soon as possible.

2.2. Research and Technology Advisor

The roles and responsibilities of the Research and Technology Advisor (RTA) are to:

• explain the SR&ED review process to the claimant, including the options for resolving any concerns;
• examine the technical documentation and other relevant information to perform a review;
• evaluate the eligibility of the work claimed;
• request additional information in a clear manner;
• discuss with the claimant any concerns regarding the eligibility of the work claimed;
• provide a report to the claimant which includes the eligibility decision of the work claimed and the reasons for the decision;
• invite feedback from the claimant about the report; and
• address the claimant's concerns as soon as possible.

2.3. Financial Reviewer

The roles and responsibilities of the Financial Reviewer (FR) are to:

• explain the SR&ED review process to the claimant, including the options for resolving any concerns;
• examine the financial documentation and other relevant information to perform a review;
• review the expenditures and tax credits claimed;
• request additional information in a clear manner;
• discuss with the claimant any concerns regarding the expenditures and tax credits claimed;
• discuss the relevant findings of the review with the claimant;
• provide the claimant with a letter which summarizes the findings of the financial and technical reviews, including a clear explanation of any proposed adjustments; and
• address the claimant's concerns as soon as possible.

For more details on these roles and responsibilities, see the Claim Review Manual, and the Financial Claim Review Manual .

3. Resolving Concerns

This section describes ways of resolving concerns that may arise during the various stages of processing an SR&ED claim.

If concerns arise during the SR&ED technical and / or financial review of a claim, the claimant is encouraged to take the following steps to resolve their concerns, before the file is closed and processed.

3.1. Concerns Regarding the Filing Requirements

To apply for the SR&ED tax incentives, the claimant must meet the filing requirements specified under subsection 37(11) and paragraph (m) of subsection 127(9) of the Act. Pursuant to subsection 220(2.2) of the Act, which applies on and after November 17, 2005, request to waive filing requirements under subsection 220(2.1) cannot be made in respect of prescribed forms or prescribed information specified for SR&ED tax incentives.

3.2. Concerns with a Review

Step One – Talk to the Research and Technology Advisor and / or Financial Reviewer

As a first step to resolving any concerns, the claimant should talk to the Research and Technology Advisor ( RTA) and/or Financial Reviewer ( FR) about their concerns as soon as possible. Issues often arise because of a misunderstanding of the facts of the claim, or a lack of information. To clarify the issues, the claimant may be asked to provide more information, to meet with the SR&ED staff, or to arrange for additional site visits. By openly discussing the eligibility and financial issues and clearly presenting the facts, often the concerns can be resolved to the satisfaction of all parties.

Step Two – Contact the Research and Technology Manager and / or Financial Review Manager

If the claimant's concerns are not resolved to their satisfaction after discussions with the RTA and / or FR, then the second step is for the parties to involve the Research and Technology Manager (RTM) and / or Financial Review Manager (FRM). The RTM and / or FRM will review the facts of the case and consider the claimant's perspective on the issues, as well as those of the RTA and / or FR. Open and direct communication between all parties is encouraged to avoid any misunderstandings. The RTM and / or FRM will work with the claimant and the RTA and / or FR to resolve the concerns.

Step Three – Request an Administrative Review

If the claimant feels that their concerns have still not been satisfactorily addressed through Step 1 and Step 2, they can request an Administrative Review (AR) (PDF, 128 KB). The purpose of an Administrative Review is to determine whether the SR&ED technical and financial reviews were consistent with the current SR&ED legislation and policies and if the claimant had been given due process, and if necessary, to implement any action to ensure that the claim has been treated in a manner fully consistent with the current policies and procedures.

In order to request an Administrative Review (AR), the claimant must have received the proposal package from the CRA, explaining the results of the review of the SR&ED claim. Then they must complete the administrative review form and send it into the National SR&ED Administrative Review Intake Centre. In their request, the claimant should explain their issues and provide relevant facts and documentation to support their case. The request will be forwarded to the local SR&ED Assistant Director within three (3) business days for processing.

The Administrative Review is usually conducted by the Assistant Director. However, the Assistant Director can delegate this responsibility to another person in the SR&ED program who was not previously involved in the case.

It is important to note that Step 3 is not a second technical review, but rather a review of all the information available to the CRA to ensure that the claim has been reviewed in a manner fully consistent with the current policies and procedures.

When conducting an Administrative Review, the Assistant Director will determine whether:

• The claimant was given due process, and
• The SR&ED technical and financial reviews were consistent with the current SR&ED legislation, policies and procedures

To determine if due process was given, the Assistant Director will decide whether:

• the claimant was given reasonable opportunity and time to explain the work and/or expenditures claimed;
• the RTA and/or FR asked for clarification of the issues, and whether the request was clear;
• the claimant was given reasonable opportunity and time to provide additional information;
• the RTA and/or FR considered all the information that was submitted by the claimant;
• the RTA and/or FR clearly explained, in a meeting or telephone call to the claimant why the work and/or expenditures claimed were not eligible;
• the claimant was given a report which included the eligibility decision of the claimed work and an explanation as to why the work was not eligible;
• the claimant was given explanations as to why the expenditures were not eligible in the proposal package; and
• the claimant was given reasonable opportunity and time to respond to the report.

If the claimant was not given due process, then the Assistant Director will determine the action to be taken to address the findings. For example, if the claimant was not given a reasonable opportunity to provide additional information to support their claim, then the opportunity to do so will be provided.

If the Assistant Director determines that the SR&ED technical or financial review may not have been consistent with the current SR&ED legislation and policies, then action will be taken to address the findings. For example, the Assistant Director may seek advice from other resources such as the RTM or FRM, or National Technology Sector Specialist or Financial Technical Advisor, or the Assistant Director may decide that a second technical or financial review is warranted.

If the Assistant Director determines that the claimant was given due process and the SR&ED technical and financial reviews were consistent with the current SR&ED legislation and policies, then no additional action will be taken and the technical and/or financial review will resume as per The SR&ED Technical Review: A Guide for Claimants .

Based on the Assistant Director's determination, there are two possible outcomes of the Administrative Review: Decision Maintained or Decision Reconsidered.

i. Decision Maintained

If the Administrative Review reveals that the SR&ED technical and / or financial review was consistent with the current SR&ED legislation, application policies and guidance documents, and that the claimant was given due process, then the technical and / or financial review will proceed in the usual manner.

The claimant will be advised of this outcome in a letter from the Assistant Director.

ii. Decision Reconsidered

If the Administrative Review indicates that the SR&ED technical or financial review was not consistent with the current SR&ED legislation and policies, or the claimant was not given due process, then further action will be taken to address the Assistant Director’s findings. For example:

• if the claimant was not given a reasonable opportunity to provide additional information to support their claim, then the opportunity to do so may be provided; or
• the Assistant Director may decide that a second technical and/or financial review is warranted. In this situation, another person not involved in the original review will conduct the review and write a report.

The Administrative Review will be documented in a memo to the Assistant Director, which summarizes the issues, process, findings, conclusion, and action taken. This memo needs to be produced only if the Assistant Director has delegated the Administrative Review.

The claimant will be advised of the outcome of the Administrative Review in a letter from the Assistant Director. This letter will be written by the Assistant Director and include relevant information from the memo noted above.

3.3. Appeals Process

Once the SR&ED technical and financial reviews are completed, and the SR&ED report is finalized, the claimant will be notified of the SR&ED expenditures and investment tax credits allowed or disallowed. If the claimant feels that the facts have been misinterpreted or the law has been incorrectly applied, they have the right to object to most decisions. Filing an objection is the first step in the formal process of resolving a dispute by the Appeals Branch of the CRA.

For more information about this process see, Resolving disputes.

4. Contact Information

For contact information see, SR&ED contacts.

Please mail your completed administrative review form (PDF, 128 KB) to the address below:

National SR&ED Administrative Review Intake Centre
344 Slater St. 16^th Floor
Ottawa, ON K1A 0L5

Appendix A: Explanation of changes

Form RC532 Request for Administrative Review – The form has been introduced as a means of ensuring that claimants and their representatives are providing the correct information to the CRA, in order to properly evaluate and act on the request.

National SR&ED Administrative Review Intake Centre – The intake centre is set up to help monitor the SR&ED Administrative Reviews. The intake centre will have no responsibility for completing the requests, but rather will distribute the requests and track progress and outcomes.

Step 3 – The request for an Administrative Review cannot be initiated prior to the claimant receiving the Proposal Package. The premise is that, only once the claimant has the results of the SR&ED review are they able to fully understand CRA's position. It is at this point the claimant can best provide the CRA with a full explanation of their issue or complaint.

Date modified:

2016-05-30