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Flawed R&D Scheme Costs Taxpayers Billions


Richard Weber on March 16, 2011 in Advice for Business Owners

SB Partners has been assisting clients’ with R&D claims for many years. We pride ourselves on the quality of the claim submission and integrity with which it is prepared.

When I read Barrie McKenna’s article on March 11th in the Globe & Mail, I applauded the exposure of flagrant abuses of and flaws in the current R&D credit program. Innovation by first world countries can no longer be considered a competitive advantage, but a global expectation of progress. As such, abuse of a core stimulation program such as the Scientific Research and Experimental Development Program by seemingly less than qualified consultants will soon disadvantage legitimate innovators and possibly reel in an important Canadian program.

As pointed out in the article, the R&D program barely pays for itself. Little wonder, since the incidence of industry consultants lured by relatively easy money and the promise of big payouts in return. Many of these dubious consultants, according to the article, are flagrantly abusing and choking the system with questionable claims. The CRA is attempting to respond by arbitrarily rejecting submissions, and imposing onerous additional documentation requirements on everyone.

This is really counterproductive for those companies who have legitimate claims. It might be difficult to rapidly halt this ‘gravy train’, but for those who are serious about claiming innovation tax credits to advance their competitive advantage, I would offer some useful and simple advice: Firstly, check the credentials of your consultant; Secondly, explore whether they have a sophisticated and integrated tax resource, as this is where the rubber meets the road in submitting your claim; Thirdly, check references.

Even though the radio and newspaper advertising insist that there is no upfront cost and everything to gain in the payout, this is one time when you should pay attention to respected brands in the consultant marketplace.