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Mother Goose and the Tale of the SR&ED Audit

“Your third SR&ED claim has to be less than the second claim, but more than the first….” “You aren’t supposed to claim all of your SR&ED eligible work in the first year….” “If my first claim is audited, they won’t accept any subsequent claims….” Over the years, we have heard all sorts of different reasons as to why companies have had their SR&ED claims audited. However, in our experience, it is safe to say that these arcane reasons are not why a claim is audited. MCN consultants have attended dozens of SR&ED audits, and have had the chance to ask CRA reviewers why claims are audited. Consistently they respond with the following answers: “The technical report did not demonstrate a good understanding of SR&ED eligible work….” “There were some mistakes or misunderstandings in the financial components….” “Every year a certain number of clients are selected for audit at random….” The […]