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How to Lower Your Audit Risk for SR&ED Claims by 50%

How to Lower Your Audit Risk for SR&ED Claims by 50%
on January 20, 2022
How to Lower Your Audit Risk for SR&ED Claims by 50%

Every year, the Canadian Government provides more than $3.5 billion to over 20,000 businesses as part of the Scientific Research & Experimental Development (SR&ED) tax credit program to offset R&D costs.

There is a 25% risk that the CRA will choose to audit your SR&ED claim in any given year. An audit is time-consuming, distracting, consumes valuable resources, and can delay your refund for months IF you are not prepared.

While most SR&ED consultants may help prepare claims, they don’t proactively prepare any of the necessary audit documentation because the process is cumbersome. In fact, they simply gamble on the fact that their clients’ claims won’t get audited at all and often take a backseat approach to defending the audit.

During an audit, you and your team will have to manually comb through thousands of records to find supporting evidence and prove the amount of time your team committed to these projects. Many SR&ED consultants don’t provide any support for this so it can take 3-4 weeks of your lead engineer’s time that could have been spent on furthering product development.

Given the immense resources needed to defend an audit properly, the CRA typically reduces SR&ED refunds by 20-40% because clients are unable to generate all of the evidence required to substantiate their claim.

Our proprietary software integrates with your tech stack and our algorithm automatically sorts through thousands of project management tickets and git commits to create the audit documentation required by the CRA by categorizing the project management system (e.g. JIRA, GitHub, etc.) tickets and git commits into the corresponding SR&ED projects.

  • Spend Less Time Defending an Audit
    We require only 5-8 hours of your team’s time to defend against an audit from the CRA. Your team gains back weeks worth of time that can be used to focus on product development.
  • Keep More of Your SR&ED Refund
    Since you’ll have all the sufficient documentation needed to substantiate your SR&ED claim, the CRA won’t be able to reduce your final claim amount (as compared with other SR&ED consultants).

As a result, our clients have a 50% lower audit rate and are ready to defend their SR&ED claim with limited time and effort. Our team of experts guide and prepare the necessary information required to defend an audit and our audit documentation automation means you get to keep a larger percentage of your claim.

The SR&ED tax credit program is a great opportunity for highly innovative Canadian companies to offset their incurred R&D costs from the government.

While a strong SR&ED claim can increase the chances of being accepted as filed by the CRA, there is always a possibility that the CRA will want to conduct an audit in detail to ensure that the SR&ED program requirements are being met.

To learn more about SR&ED or determine if your company’s R&D activities can qualify for the program.

Contact us for a free assessment.


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