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April 16, 2024

Tax Tips

New CRA Receipt Policy Worrisome To SR&ED Filers
Subject: SR&ED - Filing
Number: 07-06
Date: 3/9/2007
File early to allow CRA enough time to confirm all information has been provided

CRA has recently adopted a rather controversial new policy of not providing receipts for documents hand-delivered to their offices. This is particularly worrisome for SR&ED claimants. Whereas previously CRA would stamp a detailed receipt that itemized the documents delivered, now they will only stamp the envelope in which they are delivered.

A recent press release from CRA had the following quote:

“While CRA counter staff cannot confirm the completeness or acceptability of the contents… they will stamp the sealed envelope with the date of delivery, assuring taxpayer that a record of the transaction has been created.”

In short, this means that the taxpayer has no means of proof that the submission was filed on time if the documents get lost somewhere in CRA’s internal routing. Missing an SR&ED deadline can mean losing a substantial refund cheque. The prescribed SR&ED forms must be filed no later than the day that is 12 months after the taxpayer’s income tax return filing due date for the year in which the SR&ED expenditure is incurred. For corporations, this generally means 18 months after their year-end. There is no provision in the Income Tax Act to allow for a late-filed SR&ED claim. Therefore, if a taxpayer were to file the tax return on the last possible day, and the CRA states that it was either late or they did not receive it, there is no provision which allows for a late-filing of the SR&ED tax return.

The only relief that is possible is administrative relief wherein the CRA Assistant Director decides to accept the late-filed claim. Relying on this administrative relief is extremely risky as there is absolutely no requirement that the CRA accept the late-filed forms.

In order to avoid all of this, it is suggested that SR&ED claims be filed early enough to give CRA time to review the claims and confirm that all the information has been provided correctly. The CRA mentions in their press release that taxpayers should consider using electronic services. However, at present, a complete SR&ED claim cannot be filed electronically because CRA’s existing e-file system is not capable of accepting the technical submission document that that details the SR&ED activities which is normally filed along with the tax return itself.

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