Case Study #4: Better CRA Working Relationship

HomeSR&ED Case StudiesCase Study #4: Better CRA Working Relationship

MSN was approached by a multi-billion dollar company with an SR&ED problem. They filed their first SR&ED claims with a small, independent SR&ED consulting firm. Unfortunately, the claims went to audit, and the consulting firm’s approach was to fight with CRA, their auditors and their audit managers. The claim had been in audit for over three years. The client was told by the consulting firm that the CRA auditors and audit managers were incompetent, and they blamed the client for not keeping better records of the SR&ED work performed. They were encouraging the client to go to tax court because they were being unfairly treated. Since the client was new to the SR&ED program, they didn’t know what to believe.

After MSN reviewed the claim, it was clear that the technical report was muddled and the costing included many items that didn’t meet the criteria. As a result, we started working with the client, CRA and the other consulting firm to help CRA understand the portions of work and costing that did qualify. The relationship the client has with CRA is now turning around, and we are on track to resolve the previous claims and get the client back on the road to SR&ED compliance.

Lessons Learned: Be wary when your consultant informs you that CRA officials are incompetent or encourages aggressive action against CRA. Most of the time, there is a legitimate problem with the claim that needs to be fixed. Even if you’ve had successful claims in the past, it doesn’t mean your work will still qualify. CRA has tightened up their eligibility rules, and many consulting firms are still filing under the old eligibility rules (and having audit problems). MSN can help you navigate the SR&ED program, so you achieve every dollar deserved, without spending unnecessary time in audit.