At the February 5, 2014 External Stakeholders Working Session in Calgary, the CRA Prairie Region presented important information about the newly launched First-Time Claimant Advisory Service (FTCAS). The FTCAS is an educational effort that was promised through a $5 million funding initiative in the 2013 Federal Budget. Key features are:
- The FTCAS is intended to provide first-time SR&ED claimants with an opportunity to meet face-to-face with CRA personnel in order discuss important aspects of the program such as eligibility requirements, supporting documentation, and claimant obligations.
- For the purposes of the FTCAS, first time claimants will be defined as businesses that have not filed a SR&ED claim in the previous 3 years.
- If selected for the FTCAS program, participation by the taxpayer is obligatory.
- A FTCAS meeting will consist of a site visit by CRA staff members with an expected duration of 2-3 hours.
- Meetings are anticipated to be relatively unstructured: while the CRA is expected to cover certain points, at least some of the meeting will be designated to cover topics of interest to the claimant.
- The CRA has indicated that they are targeting to conduct FTCAS meetings with a high proportion of new SR&ED claimants in 2014.
- In particular, the CRA Prairie Region Office (serving AB, SK, MB and the NWT) is targeting to visit all first-time claimants processed before April 1, 2014.
- First-time claimants during this period can expect to have either a FTCAS site visit or a detailed review (SR&ED audit) according to the following decision tree:
- Note that no adjustments will be made to a claim through the FTCAS process.
- The end product of each FTCAS meeting will be a CRA report that is mailed to the claimant. The report will be brief and will include recommendations for the taxpayer regarding their future claims. CRA has made it clear that they expect taxpayers to act upon the recommendations made through the FTCAS process.
- Furthermore, CRA has indicated that FTCAS results will be factored into the statistical risk assessment for claims made in subsequent years.
Taxpayers may be tempted to downplay the significance of the FTCAS, regarding it as simply another mode of outreach and promotion for the SR&ED program. This is clearly not the case. The CRA is devoting considerable financial and human resources to the FTCAS project with the expectation that positive and measureable results will be achieved in terms of claimant self-assessment and future compliance. First-time SR&ED claimants in 2014 should expect and prepare for a FTCAS visit, bearing uppermost in mind that their chances of being audited in subsequent years will be directly affected by the meeting outcome. It also appears likely that the CRA will be unsympathetic towards taxpayers that fail to remedy deficiencies identified during the FTCAS process.
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