Among the companies that invest in government funding initiatives, many do not receive the full value of their application due to the complexity and resource needs of post application requirements, which can make or break your application. However, a full understanding of these requirements can ensure that the time and resources that your company has dedicated to the initial application provide a maximum return on your investment. The following is the final article in a four part series that goes behind the scenes of major Government Funding processes, including Grant Reconciliation and SR&ED Reviews, to examine some key post application requirements that can help ensure that you achieve the full value of your application.
In this four part series, we have looked at reconciling government grants, understanding SR&ED reviews/audits, and preparing for a CRA review. In this final article, we detail possible outcomes of reviews in regards to grant and SR&ED programs, and provide information on what additional steps you can or should take based the results.
As discussed in Part 1 of this series, each grant has its own reconciliation process which often involves a final cost report (for Reimbursement) and a final metrics report (or Final Report). Often, both of these reports are required to receive the bulk of the funds awarded; however, how much funding you actually receive after the submission of these documents is directly linked to how close you came to hitting your established targets. If you are unable to meet the metrics promised in your initial application, such as new jobs created, you will need a substantive explanation as to the cause; otherwise, the amount you receive will be lessened accordingly. This will also impact your standing with that grant agency, should you wish to apply for future funding.
It is important to note that, for most grants, there is no final decision dispute process. That is, if you disagree with the final decision of the granting board, you may not have recourse aside from asking for an explanation for their decision. While they are often not obligated to outline their reasoning details, they will typically do so. If they are slow in responding or if they won’t disclose any details, try talking to your regional government rep as they often have established relationships with the agencies and can get more detailed responses.
A few key items to keep in mind during these processes are:
ALWAYS make sure to speak with the regional government rep to review your application before you submit. These individuals will be key allies in helping you secure funding and iron out any issues with the grant agency.
Keep organized records — make sure all documentation is dated and logged. For reconciling costs, ensuring you have copies of all invoices, credit card statements AND proof of payments (cancelled cheques) is crucial to getting 100% of your funding.
Be realistic with your metric goals. It is important to demonstrate that the funding provided by the grant agency will help make a substantive impact on your business, but being too ambitious can lead to difficulties with reconciling information down the road, which may reduce your final payment and your standing with the agency.
Be patient. Government reps are busy and work on multiple files. Sometimes it takes a while to get your money, or to receive a response from them. Always follow up, but be patient.
Check your email/application frequently. When reviewing reconciliations and final reports, the grant agency may ask for more documentation, clarification, or additional information. Following up on these requests in a timely manner is crucial for the success of your final report.
Know your deadlines. Reporting may be required on specific anniversaries after or during the project, and failure to submit these reports can affect your funding.
Do what you applied to do. This may sound obvious, but don’t spend the money on plant expansion when you applied, and were approved, to buy capital equipment. The government is likely to claw back your funding, and you will be in poor standing for future applications.
As discussed in Part 2 and Part 3 of this series, SR&ED claims can result in different types of reviews, all of which can have an impact on the tax credits received after evaluating claim and expenditure eligibility.
Once the review is complete, you will receive a report (or proposal) outlining the determination of the reviewer(s) and what the basis for their decision was. After receiving this document, you have a 30 day window to respond to the review report with additional information and/or to further explain your position. Depending on the outcome of that action, or the decision contained in the report, there are a few next steps you can take.
If you are in agreement with the report, including the eligibility decisions and reasoning included in the document, you can sign the report and send it back to the CRA. This will result in the CRA closing the file and issuing any outstanding balance, enabling you to get your money and put those funds towards your business needs sooner. Once the CRA has closed your file, you will receive a Notice of (Re)Assessment in the following 2-6 weeks, with the applicable refund issued shortly thereafter, usually within 2-10 days.
An unfavourable review determination is not the end of the road, but rather just another detour on the SR&ED path. As mentioned above, you have 30 days to respond to the review report to outline the reasons you disagree with the report, and this can have an impact on the overall claim evaluation.
In this time, and at all times throughout any review, it is a good idea to discuss with the reviewer what your concerns are and why you disagree with their decision/reasoning. If you cannot reconcile your disagreement with the reviewer, the next step is to contact their Manager (either Research and Technology Manager or Financial Review Manager). The Manager will consider the information you provide, the facts associated with your claim, and the decision of the reviewer to determine if they believe that the correct evaluation result was attained. This can often lead to another in-person meeting.
If you do not agree with the decision of the Review Manager, you can take advantage of the new claims dispute process the CRA has implemented. To do so, you can request an Administrative Review by completing the new RC-532 form and submit it to the National SR&ED Review Intake Centre. It is important to note that that an Administrative Review can no longer be initiated prior to the claimant receiving the Proposal Package (review report) with the results of the SR&ED review. Once the RC-532 is received, the CRA will process the request within three business days to determine if you were given due process and if the CRA reviews were conducted according to SR&ED legislation, policies, and procedures. This stage is more about the process and fair consideration of the claim, as opposed to the actual details of the claim. The Administrative Review will result in one of two outcomes: Decision Maintained or Decision Reconsidered.
If, after the Administrative Review, you don’t agree with the CRA’s findings, you have the right to make a formal objection within 90 days of receiving the Notice of Re(Assessment) either through the online CRA portal, through filing a T400A form, or by sending a letter to the Chief of Appeals. A Notice of Objection can be a lengthy and time consuming process but may be worthwhile depending on the claim size and likelihood of similar disagreements in the future.
Keeping these principals and processes in mind throughout the year and all through your claim resolution process can help you ensure that you receive the funding you deserve on time and with less resource demands on your business.
*Co-authored by Jen Mahon, Vice President of Operations, and Nicolas DesRoches, Technical Writing Team Lead at NorthBridge Consultants.