Claim Review Manual for Research and Technology Advisors
Chapter 7.0 Finalizing the review
Table of contents
- 7.1.0 Summary of chapter
- 7.2.0 Requirements of chapter
- 7.3.0 Proposal package contents with adjustments
- 7.4.0 Proposal package contents without adjustments
- 7.5.0 Presentation of the proposal
- 7.6.0 Representations after the proposal letter
- 7.7.0 Statute-barred dates and waivers
- 7.8.0 Concluding the review for the RTA
7.1.0 Summary of chapter
This chapter discusses procedures for concluding the scientific research and experimental development (SR&ED) review. The main topics are:
- content of the proposal package;
- presenting the proposal to the claimant;
- procedure for resolving claimant's concerns with the proposal; and
- concluding the review after resolving claimant's representations.
7.2.0 Requirements of chapter
Following from Chapter 1.6.0, the minimum requirements of the research and technology advisor (RTA) outlined in this chapter are as follows:
- assist the financial reviewer (FR) in preparing the contents of the proposal package by providing any needed explanation of the proposed changes with respect to eligibility and any other technical issues;
- explain the proposed decisions with respect to eligibility or other technical issues to the claimant;
- respond to any claimant’s concerns, representations or additional information relating to the RTA’s work, as reflected in the proposal package;
- consult the research and technology manager (RTM) in contentious situations; and
- document relevant review work.
7.3.0 Proposal package contents with adjustments
Note that while joint proposals are strongly encouraged, there may be situations that warrant the issuing of a draft SR&ED review report prior to the FR's proposal letter. An example is where the RTA completes their review well before the FR. The decision to issue a draft SR&ED review report is at the discretion of the RTA and is subject to local management preference.
While the proposal is the formal statement of Canada Revenue Agency's (CRA) decision, the RTA and FR must have previously presented their decision, and shared their concerns to the claimant, so that there should be no complete surprises in the proposal package. However, the claimant may not have the full picture or all the details. Therefore, while discussions with the claimant likely took place throughout the review process, the proposal (and if required, the meeting) is the opportunity to draw all issues to a resolution, and to ensure that the claimant is aware of the adjustments proposed, whether or not concurrence is reached.
In certain circumstances, it may be preferable if eligibility-related issues are resolved prior to issuing the proposal letter. If agreed by all the parties including local management and in consultation with the FR, the RTA can send a draft SR&ED review report to the claimant, and the claimant’s concerns or additional representations can be addressed in advance of the proposal. The procedure for resolving these concerns and responding to additional representations is discussed in Chapter 7.6.1 and applies to large files as well.
The proposal package consists of the following:
- Proposal letter – This letter summarizes the proposed adjustments on claimed expenditures. This letter describes all the financial adjustments based on the technical and financial reviews. It also includes a summary of the RTA's decisions on eligibility and eligibility-related issues. The proposal letter is prepared by the FR. If possible, it is preferable that it be signed jointly by the FR and the RTA. Upon request, the FR provides a copy of the proposal letter to the RTA. The claimant is normally given 30 days from the date of the proposal letter to provide any response, representation, explanation, further documentation relating to the proposed adjustments, or requests for an administrative second review. A reasonable extension of time can be allowed if such is requested by the claimant to consider the proposed adjustments and to prepare a response. It is recommended that the extension be confirmed in writing bearing in mind the possibility of periods under review becoming statute-barred.
- Paragraphs relating to the RTA's review.
- SR&ED review report – Chapter 6.8.0 describes how to prepare the report and its contents. As discussed in Chapter 5.6.9, it is preferable if the claimant would already have a good idea of the decisions prior to the proposal letter, and in some cases may already have received a copy of the draft SR&ED review report. Note that if a draft report is issued, it must be marked "draft" and a final SR&ED review report must also be issued even if the content has not changed. Chapter 5.6.9 discusses the procedures concerning the various communications and report scenarios. It is understood that the SR&ED review report can and will be amended, if new information that is provided after the proposal gives a reason to do so.
- Recommendations or requests to the claimant – This includes specific requests or recommendations to the claimant as required, such as improving books and records, improving project information, identifying SR&ED, structuring their claim, and references to publications and seminars. When recommending improvements to project information, the RTA should use the current problems as an illustration.
7.4.0 Proposal package contents without adjustments
7.4.1 All work is SR&ED
If all issues have been resolved in the claimant's favour, and if no financial adjustments are to be made, the claimant is informed that the file is being closed without any changes. If the RTA made an on-site visit and some issues have been discussed with the claimant, the RTA should write an SR&ED review report (discussed in Chapter 6.9.2) with an explanation of the position taken with respect to the issue (for example, that the work is SR&ED). This is because the claimant has likely spent some time explaining and justifying their position to the CRA, and this would provide some assurance and guidance for them in future claims.
7.4.2 Work is SR&ED but there are technical-financial issues
Even if all the scientific issues have been resolved in the claimant's favour, some financial adjustments may be proposed after the financial review. In this case, the FR will issue a proposal letter describing the proposed financial adjustments. The work done by the RTA may be documented the same way as described in Chapter 7.4.1 by means of an SR&ED review report (discussed in Chapter 6.9.2). If needed, the RTA could provide some input to the FR's proposal letter where helpful advice to the claimant for future claims could be given.
7.5.0 Presentation of the proposal
The specific details of this process depend on whether the proposal is presented jointly by the FR and the RTA or whether the financial and technical parts are discussed separately. However, the principles remain the same.
It is recommended that the proposal be presented jointly. To do this, the RTA and the FR have these options:
present the proposal package to the claimant during a meeting held specifically to explain the proposed adjustments;
discuss it over the phone; or
send it to the claimant and discuss it afterwards, if requested by the claimant.
The presentation of the proposal is not intended to be a meeting to rebut the CRA's position. It is intended to provide the claimant details of the rationale for the decisions and thus allow them to prepare a rebuttal or additional representation, if they intend to.
Sometimes it is easier to explain or discuss the adjustments in a meeting rather than over the phone or through written correspondence. However, if a meeting is suggested and the claimant indicates that it is not necessary, this should be documented in the file.
Whatever the method, the claimant must receive a full explanation of the proposed adjustments and must be given adequate opportunity to respond to them. The FR would explain the financial adjustments and the RTA would explain how the eligibility and other technical issues were resolved.
7.6.0 Representations after the proposal letter
7.6.1 Procedure for the CRA's response to claimant
Note: these same principles apply if a draft SR&ED review report is sent to the claimant and the RTA responds to the representation prior to the proposal. If the claimant agrees with the proposal, or there is no written response to the proposal within the 30 days allowed, the FR processes the (re) assessment. Otherwise, the RTA must follow the following procedure:
1. If the claimant does not agree with the proposal, they must send their representations to the CRA in writing. If they do not reply in writing, they must be informed to do so prior to any additional meetings or responses and prior to the end of the 30-day deadline. Examples of claimant requests and representations are as follows:
- requests for additional explanation (the claimant did not understand CRA's rationale);
- new arguments that identify what the claimant perceives as specific flaws or errors in the CRA's work;
- additional information in support of the claim, which the claimant hopes will result in a changed decision; and
- a request for an administrative second review (following the procedures of Application Policy SR&ED 2000-02R Guidelines for Resolving Claimant's SR&ED Concerns). If the claimant had already made this request prior to the proposal, the CRA would have already responded to it. Note that, in accordance with Application Policy SR&ED 2000-02R, the claimant is entitled to request for an administrative second review any time before the file is closed and processed.
2. When received, respond to representations and/ or submissions from the claimant. A detailed response is necessary only if the submission is relevant to the review issues and decisions. If the submission is not relevant, the RTA will acknowledge its receipt and give the claimant a brief explanation of why the decision remains unchanged. Examples of non-relevant claimant submissions or representations include:
- no new information or arguments are submitted by the claimant or the claimant resends information previously reviewed by the RTA;
- request for a meeting is made, but with no new information is given in writing;
- statements that only indicate a disagreement with the CRA, a general criticism of the CRA's work with no specific flaws or errors indicated, but with no specific question or request for clarification;
- statements indicating a disagreement with the CRA's policy or the CRA's official interpretation of the legislation. However, if the claimant does agree with the CRA’s policy and thinks that the RTA’s position differs from this, the submission would be relevant; and
- criticisms or comments that the CRA has already responded to.
3. The CRA's response must address all the relevant issues raised by the claimant and explain why the CRA agrees or disagrees. It is not sufficient for the RTA to simply state that the CRA does not agree. The response should, to the extent possible, provide further explanation of the RTA's decision, explain why the additional information did not change the decision, or indicate that the RTA has changed the decision as a result. The RTA can offer to meet with the claimant to present and explain the technical review results and then require the claimant to respond within a certain period.
4. If any of the representations change CRA’s decision, the changes are reflected in the final letter and the attachments, including the SR&ED review report addendum (discussed in chapter 6.9.4), which will be sent to the claimant.
5. If the claimant supplies further representation following the initial CRA response, the procedure described previously is followed. For as long as the representations are relevant and reasonable, the RTA should accommodate the representations made by the claimant. However, when it is clear that no progress is being made or that the claimant is delaying the process by:
- not giving all of the requested information at once,
- requesting without reason additional time beyond the 30 days given to respond to the proposal letter,
- requesting meetings without providing any additional information; or
- being unwilling to meet to discuss the issues they raised,
then the RTA can give a final response to the claimant based on the information available. Before concluding that the claimant is delaying the process unreasonably, the RTA should inform the FR and the RTM of their intentions. If the FR and RTM agree with the RTA's decision, then the RTA proceeds to inform the claimant of this decision, either by phone or letter, and the (re) assessment can be processed without delay.
6. Following the CRA's response to the claimant's representations, the (re) assessment can be processed by the FR according to the proposal (discussed in Chapter 7.9.0).
The RTA should document all relevant discussions and meetings concerning the proposal or the representations, and add this documentation to the file. The documentation should include the date, place and time of meeting, persons present, details of proposed adjustments and the claimant's representations and position on the proposed changes.
7.7.0 Statute-barred dates and waivers
If a tax year for which adjustments are proposed will become statute-barred shortly after the 30-day response period, the proposal letter must state that no extension of the 30-day period for representations will be provided without a signed waiver having been received prior to that time. If the claimant refuses to sign a waiver, the file will be processed without delay at the end of the representation period.
Where adjustments are being considered but the file will become statute-barred before the expiry of the 30-day representation period, the FR in consultation with the RTA should decide either to drop the proposed adjustment or to provide a representation period of less than 30 days. Caution should be exercised where representations are requested in less than 30 days. The adjustment should be considered material and approval should be obtained from the assistant director (AD) of SR&ED.
To avoid such situations, determine the status of the file when it is received from the control function (CF) and before commencing on the review. Files close to the statute-barred date may need to be reviewed with a higher priority. If in doubt, the RTA should discuss with the RTM and the FR on how to proceed.
7.8.0 Concluding the review for the RTA
After the period of response to the proposal is over and the RTA has made the final decisions, the FR processes the (re) assessment based on the work of both the RTA and the FR. The RTA can then complete the TF98 file discussed in Chapter 6.10.0). Local Coordinating Tax Services Office (CTSO) administrative procedures determine what is done afterwards.
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