In the previous post, we discussed the average amount of time it takes to process and receive your SR&ED refund.
Most companies can receive their SRED refund much faster by optimizing their SRED processes before and after the claim gets into the hands of Revenue Canada. Here are some recommended strategies for getting your refund faster:
- Document during the year, not after – Most companies scramble after their fiscal year-end to find supporting documentation that will allow them to make a SRED claim. This is the worst time to do it because people are busy closing the year for tax purposes, and much of the collected knowledge about R&D has been forgotten. Keeping good documents throughout the year will allow you to have all the documentation on hand before your year end. A side benefit to keeping good documentation is the possibility that you’ll be able to make a larger claim.
- Properly document sub-contracts – If you’re audited, a lot of time is wasted trying to chase down sub-contractors who are missing a Business Number (or their SIN), or because of missing contracts and invoices. Make sure you have all of this paperwork on hand before you file your claim. This way you can produce the documentation if you’re asked.
- Don’t have GST/HST balances – Don’t be the company that had their $75,000 refund cheque held because they owed $400 in outstanding GST payments. Don’t assume the various government departments will work everything out between them. Make sure you are up to date on all government fees (both federally and provincially) and you’ll get your refund sooner.
- Triple check your claim – Minor errors (like improperly accruing salaries that cross the fiscal year, or forgetting to attach your project descriptions) can add up to much more processing time. Revenue Canada service standards do not necessarily apply when re-opening and adjusting claims. Be careful.
- Make SRED part of your daily business processes – The best thing you can do to speed up your refund is to integrate SRED into your daily business practice. This ensures that the year-end is not a huge hassle that takes 6 months. There’s no reason you shouldn’t be able to file as quickly as the rest of your corporate income tax return is prepared, and perhaps sooner. After all, that big refund cheque is a big incentive. Monthly R&D review meetings, document archiving and expenditure capturing are all tasks probably best left to an external SRED consultant. They can not only save you time but they can educate you about SRED best practices.