For a long time, scientific research and experimental development (SR&ED) claimants and the Canada Revenue Agency (CRA) have disagreed on the extent and nature of contemporaneous documentation required to support the technical work and the related expenditures. This persists despite continuing consultations between the CRA and claimants, practitioners and industry.
The Canadian Income Tax Act requires every person carrying on a business and every person who is required to pay or collect taxes or other amounts to keep books and records that will enable the Minister of Revenue to determine the taxes or other amounts that should have been withheld, deducted or collected. The tax system is based on self monitoring and the burden of proof for deductions and claims properly rests with the taxpayer.
Therefore, every SR&ED claim that is filed must be supported by documentation that will allow the CRA’s Research and Technology Advisor (RTA) and the Financial Reviewer to determine that the amount claimed is correct.
Download the PDF to learn what RTAs look for when undertaking their reviews.