In a previous article, I treated the different stages that compose the SR&ED tax credit review process. In conclusion, I briefly took up a stage that could occur after that process, the “refusal.” Today, I decided to summarize the objection process.

The first objection level refers to filing a Notice of Objection. In other words, following a refusal from the CRA by the intervention of a “Notice of Assessment or Notice of Reassessment,” an applicant has 90 days to file an objection from the date of the notice. During the review process that will follow, a Research and Technology Advisor (RTA) will review the technical and financial issues related to SR&ED to resolve the dispute with the applicant.

Depending on the complexity of the claim, this treatment can take from two to three days. The treatment duration depends mainly on the review of the technical issues because the analysis ensues of the work interpretation from the CRA. On the other hand, the review of the financial issues includes few ambiguities. The CRA will content itself to review the calculations that were already done.

Concerning this approach’s success rate, the SR&ED cases present as many chances of success as other types of cases being subject to a Notice of Objection filed with the CRA. A SR&ED case has 53% chances to overturn completely the CRA’s decision, and 23% chances to be partially accepted.

If you disagree with the CRA’s decision resulting from an objection, you can appeal your assessment or determination to Tax Court of Canada. This option is the most costly of the two. It costs at the very least, more than $100,000 and requires to be represented by a lawyer. Its cost is dissuasive for more than one because it widely exceeds the credit claimed by the taxpayer.

Finally, since a claim process can take up to two years, it can prove more profitable to negotiate with the CRA before the RTA’s official report comes out. This negotiation process is placed before the report acceptation, a stage that precedes the filing of a Notice of Objection. If your liquidity need does not permit you to wait for a second verification, accept the amount offered by the CRA and fill, afterward, a form for an objection. Otherwise, it is best to negotiate with the CRA to obtain the best agreement. So you will avoid the long wait that entails the review process for Notices of Objection.

The information contained in the article comes from the APFF (in French: Association de planification fiscale et financière).