There’s an old non-joke about the recipe for elephant stew that read: “take one elephant – cube it.” Not all that funny – but we can imagine the effort involved in cutting up an elephant into little cubes of stew. It would be discouraging – about as discouraging as the effort to review one of those “mega-claims” the Canada Revenue Agency (CRA) used to get, before they introduced the short form.
No doubt some claimants have been persuaded, by some advisors, that some fairly marginal claims would sneak through the system because the amounts claimed are relatively small and “not material” when compared with many others. No doubt some claims may have been “puffed up” with extra words to give weight where real substance was lacking. However, I think that with the introduction of the short form, CRA has adopted a strategy that will introduce increased scrutiny for all claims, big and small, by leveling the size of individual claims.
The short form reduces things to a fundamental simplicity that leaves no room for the Cecil B. DeMille movie treatment – there’s not much room for smoke and mirrors in 1400 words. The CRA is has effectively forced us to “cube the elephant” for them – by forcing down the effective size of what can be described or claimed in one individual form.
That approach is somewhat punitive for claimants with larger claims – it drives up the costs of self-compliance – but it also means that, as an industry, the onus is now on us: we need to present claims in tiny, bite-sized packages that contain credible uncertainties, advancements, and work performed.
The implications of the CRA’s approach are clear: limiting the scope of what can be effectively claimed in a small space is the first step toward imposing a more-or-less standard level of granularity, so that more consistent review can be applied across the board, and more consistent (and perhaps more stringent) standards can be applied to every claim.
On the other hand, the use of the short form should make it apparent that a small business does not have to write a full length science-fiction novel in order to claim SR&ED – it’s now more like a technical (documentary) short story, about what you tried to do, and what happened as a result. Short and sweet – with a big return at the end of it, if you’ve got the facts right. That’s a process that could make the SR&ED program a lot more accessible to small and medium businesses, with or without professional help.
Seeking increased consistency, increased stringency, and increased access in a process of this magnitude is admirable -- achieving it would be miraculous. So perhaps we should manage our expectations and keep up the dialogue. This will all work out in the end.
Bruce Madole