Canada’s Scientific Research & Experimental Development (SR&ED) tax incentive program, designed to encourage innovation, technology and scientific advancement, is a complex regime of tax deductions and investment tax credits that can have a significant impact on the ongoing compliance and tax liability of a business. Developing an effective strategy to manage and defend claims requires experienced counsel with an in-depth technical understanding of the SR&ED program, the Canada Revenue Agency’s (CRA) approach to assessing SR&ED claims, and the tax dispute resolution process, both at the federal and provincial level.
Osler’s National Tax Group has extensive experience in managing SR&ED claims and disputes, advising clients across a number of industries including food and agriculture, natural resources, pulp and paper, pharmaceutical and automotive. We provide advice throughout the cycle of SR&ED claims, including in connection with:
- SR&ED claims – Strategic approaches to claiming eligible projects, including reporting and documentation;
- CRA audits – Strategic responses to audit queries and responses to proposed assessments respecting scientific/technological eligibility and project costs;
- CRA appeals/objections – Preparing objections and submissions relating to technical, costing and legal matters relating to SR&ED claims;
- Litigation – Managing litigation before the Tax Court of Canada and federal courts, including leading expertise in experts and settlements.
Contentious SR&ED issues
We have advised on a number of SR&ED issues at various points in the SR&ED cycle, including
- advancement vs. routine engineering
- experimental production vs. commercial production
- project-based vs. activity-based assessments
- systematic approach to resolving technological uncertainty
- record keeping, including the requests for contemporaneous documentation
- jurisdictional issues
- operational expenses and capital expenses, including shared-use equipment
- traditional vs. proxy method
Québec SR&ED and other innovative tax credits
We have also advised on issues specific to the Québec SR&ED regime, including the qualification of salaries and wages for the Québec tax credit. We also have experience with other Québec innovative tax credits including
- Incentive Deduction for the Commercialization of Innovations in Québec
- Tax Credit for the Development of E-Business
- The Tax Credit for the Production of Multimedia Titles
Osler resources
Scientific Research and Experimental Development: Is improving cost efficiency relevant?
Canadian Tax Foundation – Jul 19, 2021
Osler’s Jennie Han and Joanne Vandale write that the question of cost efficiency is a relevant consideration in the examination of whether work undertaken constitutes SR&ED. Read more.
Innovation Energy: Oilsands step up to take on clean tech challenge
Financial Post – Jul 4, 2019
Osler partner Joanne Vandale tells the Financial Post that “the idea behind clean-tech and innovation credits is a good idea, but it has to be administered properly by people who understand what is happening in the industry.” Read more.
External resources
Scientific Research and Experimental Development Tax Incentive Program
Government of Canada
Learn how to claim scientific research and experimental development tax incentives and get information about the Government of Canada’s program. Read more.