Archived information is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Finding Common Grounds Inc. Submission in Response to Joint Finance Canada – Canada Revenue Agency Consultation Improving the Scientific Research and Experimental Development Tax Incentives:
Nancy Horsman and Peter C. Armstrong
Joint Finance Canada – Canada Revenue Agency SR&ED Consultations
140 O'Connor Street
November 13, 2007
In relation to Consultations on Improving Scientific Research and Experimental Development (SR&ED Tax Incentives), we would like to address the following administrative challenge:
Reconciling the processing of the Investment Tax Credit (ITC)
Over the last 10 years, we have continuously encountered difficulty in reconciling SR&ED ITC amounts with corresponding Corporate Notices of Assessment (CNA) and Corporate Notices of Reassessment (CNR). Although in most cases the ITC refund is adjusted to reflect amounts applied and/or credited to part I tax, part IV tax, retail sales tax, arrears interest, and refund interest, the CNA and CNR consistently fail to display the total ITC approved and related adjustments.
This is particularly a problem when the SR&ED is submitted as an amended return as well as when the ITC has been revised, as there is no confirmation of the final ITC approved.
Several years ago, the FNA often provided a moderate level of detail to facilitate reconciliation, including the total ITC amount, amounts related to Part I tax, and amounts related to refund interest. Although the existing FNA and FNR contain fields to indicate ITC approved, taxes, credits, and interest, most of these fields are usually blank or inaccurate, making it impossible to reconcile and verify amounts being processed.
Unfortunately, this is currently being handled by calling the CRA business enquiries telephone service and requesting a breakdown of the total refund being processed, in order to correlate between the approved ITC and the amount of the refund cheque. The service agents handling the calls are often unable to decipher the breakdown, either because the internal system does not consistently display the related information, or they are unsure of how to locate this information.
After guiding the agent through understanding the nature of the missing information, the result of determining an accurate breakdown ranges anywhere from indeterminate to partially or fully-resolved. This telephone process often takes 30 minutes of time, and also frequently requires more than one phone call in order to completely resolve, which seems to be an unnecessary investment for telephone agents and for the CRA in general.
In an attempt to resolve the ITC-refund reconciliation ambiguity, in the interest of SR&ED Claimants as well as the Canada Revenue Agency, we would like to propose the following recommendations:
1. Make full use of the existing standardized format of the CNA and CNR, which already contains fields related to adjustments to taxes, credits, interest, and ITC approved. If applicable, include any additional information required to show how the ITC approved arrives at the total amount refunded.
2. An equivalent internal system at the business enquiries centre, which clearly displays the total ITC approved, and all related adjustments, totalling the refunded amount.
3. Related training for business enquiries telephone agents, on how to access a complete list of adjustments related to the refundable amount, thereby enabling agents to promptly and confidently respond to related enquiries.
Implementation of these recommendations will be an excellent step in helping to reduce unnecessary administration time and costs for the CRA and SR&ED Claimants.
We appreciate this opportunity to submit our recommendations for the SR&ED Program.
Rosanna Falcone, B.A.Sc.
Finding Common Grounds Inc.
2425 Matheson Blvd. E., 8th Floor