Month: May 2017

There is never enough time in the day, especially when it comes to R&D.
Save some time and make your SR&ED claim process as smooth as possible by implementing these four simple productivity hacks:

1. Automate time tracking as much as possible

We recommend tracking 100% of your time but it doesn’t have to be a monotonous process. Set up your time tracking categories upfront (here are some great examples) and then let software tools automate the rest.

Here are some automated time tracking tools to try out (if you aren’t already) this year:

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  • Boast.AI – Boast integrates with your project tracking and code repository systems such as JIRA, GitHub, etc. to automatically generate time tracking by each employee. However, it can also be used for manual time tracking, which is still a better experience than tracking time on spreadsheets.
  • TimeCamp – when switched to automatic mode, all of your time is tracked to tasks using certain keywords. It uploads your tasks and integrates nicely with systems such as Trello, Basecamp, and Asana.
  • Chrometa – automatic tracking that records time spent within all applications, documents, emails, and web pages. It also records time while you’re away and prompts you to make notes.
  • Desktime –  automatically tracks your desktop time as productive, unproductive, or neutral and enables you to see both individual and organization level analytics.

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If you’re still tracking time on spreadsheets and aren’t quite ready to automate that process, here are a few other time tracking solutions:

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  • Replicon – offers a number of cloud-based time tracking applications that are customizable to your organization’s needs. It’s also integrated with large payroll services such as Ceridian, ADP, and SAP.
  • Toggl – looking for a minimal solution? Toggl is a free time tracking tool that helps you keep track of tasks and only requires one click to start tracking. It also integrates with popular project management platforms such as Basecamp, Asana, and Trello.
  • Chime – free time tracking tool that easily lets you send updates to team members and measure ongoing progress. It integrates nicely with BamBam!, a task management tool.

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2.  Stop discussing project details over email

It’s easy to get bogged down by email. It’s also very time-consuming to stay on top of organizing your email into folders and categories. Save yourself the headache of having to dig through your inbox for SR&ED-related communications and start recording notes in one central location.

Use tools like JIRA, Trello, or Asana to improve your project management, tracking, and communication efforts (and keep those notes out of your inbox).

Bonus: click here to download this 20-page SR&ED Guide to learn everything you need to know to prepare a successful claim.

3. Schedule 15-minute check-in meetings in the afternoon (Tuesday afternoon to be exact)

Research shows the most optimal time for meetings is 3 pm on Tuesdays. It is still early in the week and leaves enough time to accomplish deadlines and finish other tasks before the end of the week.

Want to streamline your project meetings even more? We recommend a weekly standing-only meeting to discuss project challenges. Keep these meetings to 15 minutes to maintain everyone’s focus and make the best use of your team’s time. Have someone record all of the notes discussed and this will keep you on top of all of your documentation needed to fully support your SR&ED claim.

You can also implement the small-group principle and only include those who have something to add. Oh, and be sure to leave smartphones at your desk.

4. Plan your SR&ED claim backward and start now

You plan your project backward, so why not apply the same approach to your SR&ED claim?

Set aside less than an hour to meet with your SR&ED advisor and plan out your claim from start to finish. Being proactive and submitting your claim within the first six months of your fiscal year-end will guarantee your claim is processed by the CRA and returned within 120 days.

Be sure to review your current time tracking and documentation methods with your SR&ED advisor. They can recommend tweaks to your existing methods to ensure that your team’s documentation will meet the CRA’s strict documentation standards. The goal of reviewing this information is not to introduce brand new systems, but to expand on your team’s existing efforts so that they can continue to focus on doing what they do best and you can rest assured your documentation will support your claim in case of a CRA review.

For those of you with a December fiscal year end, it’s finally your favourite time of year: tax season! With preparing corporate taxes, also comes preparing your SR&ED tax credit claims.
In the Tax Court of Canada ruling issued Feb 2015, the Honourable Justice Judith Woods wrote, “The scheme of the Act in relation to scientific research expenditures is tortuously complex.” Part of what makes the program so ‘tortuously complex’ are the specific glossary terms that the CRA uses.

Here are the top 7 terms from the CRA Glossary you need to know to claim SR&ED this tax season:

1. Applied Research

“Applied research is work undertaken for the advancement of scientific knowledge with a specific practical application in view.”

In other words, applied research solves a specific problem. If your car is too slow, you’d experiment to answer the questions “Why is it slow?” and “What can I do to make it faster?”

2. Arm’s Length

“Arm’s length refers to a situation where two parties that deal with each other are not related to each other and no control exists between them.”

In other words, this is a transaction in which the buyers and sellers are independent and have no relationship to each other. This ensures that both parties are acting in their own self interest and are not subject to any pressure from the other party.

3. Experimental Development

“Experimental development is work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto.”

Qualifying SR&ED projects need to advance technology or fill a technological gap, whether that’s revolutionizing a production process or increasing productivity on a very minor scale.

4. Investment Tax Credit (ITC) Carryback & Carryforward

“Investment tax credit (ITC) carryback refers to an ITC amount the taxpayer earned in a tax year and carried back and applied against Part I tax otherwise payable in any of the 3 previous tax years … Carryforward refers to an ITC amount the taxpayer has not applied, refunded, or carried back that can be carried forward and applied against Part I tax otherwise payable in a subsequent tax year. The carry-forward period is generally 20 tax years.”

In other words, carryback allows you to apply the credit you received up to three years previous and a carryforward allows you to apply the tax credit for up to 20 years credits earned in tax years that end after 1997.

5. Materials Consumed

“Materials consumed in the prosecution of SR&ED basically means the material was destroyed or rendered virtually valueless as a result of the SR&ED.”

This refers to all materials destroyed or rendered during testing, experimentations. For example, this includes trial runs of SR&ED projects and now considered as waste or valueless materials.

6. Materials Transformed

“Materials transformed in the prosecution of SR&ED generally means, material for SR&ED, that has been changed or incorporated into another material or product as a result of the SR&ED and the material still has some value either to the claimant or to another party.”

Basically, this refers to materials that have changed during the experimentation process and still have some value either to the company or to another party.

7. Proxy Method

“The proxy method is an alternative method to the traditional method in computing SR&ED expenditures.”

When the proxy method is applied, you can increase your eligible salary pool by 55% (it was 60% for 2013 fiscal year claims). For example, if you have $100,000 of SR&ED eligible salaries then you get $55,000 to cover your overhead expenses.

The proxy method saves a lot of time internally; you don’t have to document each expense and produce the necessary paperwork to support your calculations. We like to think of the proxy method as an assumed ‘lift’ to cover all associated overhead.

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If you have any questions about the terms and how they apply to your SR&ED claim, give us a call. The entire CRA glossary for SR&ED can be found at: https://www.cra-arc.gc.ca/txcrdt/sred-rsde/clmng/glssry-eng.html

 

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