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First-Time Claimant Advisory Service (FTCAS) for SR&ED claimants

In 2014, the CRA started rolling out a new program for the first-time SR&ED claimants appropriately named the First-Time Claimant Advisory Service or FTCAS. The program is new, and there seems to be some confusion with respect to its objectives and consequences. The confusion seems to stem from the CRA’s description of the program and the way it is being implemented. On the one hand, the CRA states that “the FTCAS is not a review or an audit and the CRA staff will not make any determination of the eligibility of work or expenditures claimed”. On the other hand, in the same document, the CRA explains that “should a refund be expected as a result of filing a claim, it will be processed after the site visit.” After reading this, one would immediately wonder why the SR&ED refund is being processed after the site visit if during the visit the […]


The Case for Using SR&ED, OIDMTC, IRAP and Other Government Incentives

As consultants we meet with many different companies and, to our surprise, a substantial number of business owners, particularly owners-managers, are reluctant to tap into the government incentives available to them. Somehow these very capable, self-made, independent businesspeople perceive applying for government assistance or tax credits as an acknowledgement of their inability to succeed on their own. The most prevailing excuse is “it’s too much hassle to deal with the government”. Consider that by maximizing your benefits from various government programs and incentives you actually help the government to achieve their public policy objectives. It may sound funny, but the government needs you. Don’t be shy to apply. Take for example SR&ED. The Federal government uses the Scientific Research & Experimental Development (SR&ED) program to give Canadian industries a competitive edge over international companies. The purpose of the program is to encourage SR&ED activities by reducing the amount of business […]


SR&ED: Subcontract vs. T4 Labour

In working with our clients we frequently encounter confusion regarding the ramifications of utilizing contract labour versus salaried labour to conduct SR&ED work. The decision to structure the relationship between an employer and potential employee or contractor needs to be examined not only for general business implications but also for specific SR&ED implications as it can have a significant impact on a company’s eligible SR&ED expenditures for ITC (investment tax credit) purposes. A common misconception is that the financial advantages of employing contract labour make this a preferred arrangement. The financial advantages of contract labour include minimizing the employers EI and CPP burden as well as reducing costs associated with various employer funded employee benefit programs. These advantages quickly disappear in the context of a firm conducting SR&ED. This is best illustrated with a simple example. Let’s compare the two situations where the company in question is a CCPC in […]