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4 steps to a successful R&D claim...Not!

It's simple right!

  1. Push hard all year

  2. Wait until year-end tax time

  3. Stay up all night...4 days running

  4. Submit ... get the SR&ED rejection letter and fail the audit

Sound Familiar?

Navigating the SR&ED claim process is time-consuming and it certainly is stressful, particularly for those without the experience and confidence of an internal process and culture of research. I'm speaking from experience. My first attempt at a claim was in early 2000. In an enquiry with the local SR&ED office, I was flatly told that if I had accomplished my goals it would not be SR&ED. Wow, I was disheartened.

But I am a persistent son of a bitch. I reviewed processes, gained insights into how things work, and made a claim. And let me tell you. When that claim was approved and the check received it almost brought tears to my eyes. Success and newfound cash flow for our fledgling start-up.

Fast forward 20 years and over 60 successful claims, we are no longer a start-up. What has been learned and how can this affect your success in today's environment. Take these 4 steps and build your success with SR&ED.

1) Start at the start:

R&D is about documentation. It's about looking at your projects early, defining what you want to go right, to happen quantitatively, with respect to outcomes. Document and define a hypothesis...remember this is Scientific Research. Simply jumping in may not provide you with the defence needed during a review. We always expressed outcomes early and in relation to numbers. What did we need to happen, quantitatively for the project to be a success.

2) Monitor and measure.

It took us some time to figure out that keeping an updated log of our progress was key to making the end game low-stress. Ultimately, we created monthly updates of technical progress and financial implications. We looked for failures, unexpected occurrences both positive and negative and we documented it all, related it to our hypothesis and made judgements on our progress.

3) Break it into manageable projects.

I never submitted one large project, others in my round table did and when they were rejected it hurt, big time. Rewriting a major project into multiple subprojects is an after-the-fact pain in the ass. Do it from the start. Don't let yourself fall for one project when having separate but associated projects lower the risk of financial impact should a decline occur. Speaking from experience, losing one small project in an audit is far less painful than your complete SR&ED claim.

4) Keep your team informed.

It's all about culture and accountability and SR&ED is no different. I recall sharing a significant financial win with the team upon receiving approval. Now we did share our P&L on a regular basis, which is not something everyone is comfortable with, but making sure your team understands the importance of the claim value to your companies performance, your ability to grow and spend on tech, marketing and other important competitive aspects of the company is only a benefit.

So what's most important?

In our situation, sharing the outcomes was incredibly valuable. When the team understood the value of the SR&ED program to the viability of the company and its growth, the culture took over and all the other steps became easy.

What worked and didn't work with your R&D projects?

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