Clinician Scientists and SR&ED
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The document discusses the benefits of the Scientific Research and Experimental Development (SR&ED) tax credits for clinician scientists, emphasizing substantial financial rewards from research activities. It addresses challenges such as documentation and the complexities of claims associated with medical professional corporations, while outlining strategies to optimize claims and ensure compliance with Canada Revenue Agency requirements. Ultimately, the text highlights the balance between potential financial gains and the burdens of navigating the claims process.
Clinician Scientists and SR&ED
- 1. ClinicianScientistsBenefitfrom ScientificResearchTaxCredits(SR&EDProgram) Hugh Faloon, tax partner at prominent Ottawa accounting firm GGFL interviewed SR&ED Tax Credit consultant Maurice Goulet of Goulet Associates to discuss how his firm helped many doctors receive multiple refunds over several years. Goulet Associates have also worked with many practice groups and accounting firms across Canada. Here Maurice answers some commonly asked questions regarding SR&ED claims by Clinician Scientists. 1. How does SR&ED benefit clinician scientists? Considerable financial benefits can result from research done by Clinician Scientists. In fact, our clients routinely receive five-figure benefits each year. It’s important to understand that the time doctors spend in research is time they are not earning clinical fees or being with their families; thus the financial benefit is both deserved and earned. 2. How do you identify clinician scientists who would benefit from SR&ED? First, these clinician scientists are clinician scientists who perform research as Principal Investigator or Co-Investigator, typically receiving no pay for their research. Secondly, their clinical fee revenues flow into a medical professional corporation (MPC). 3. Are doctors using this program the same way our software and manufacturing clients use it? Our doctor clients use the same forms as other technology developers to report their research projects and related expenses. While most tech firms have ordinary employees, MPCs have the owner as an employee. Capturing claimable costs can be difficult, since many doctors operate in complex environments with layers of agreements, responsibilities and payment streams. Clear and supportable claim costs can be challenging to define. 4. What are some of the challenges in medical SR&ED claims? It’s always in the details. Our clients are associated with institutions such as hospitals, universities, regional bodies and provincial health plans. Sometimes, practice groups are organized in ways that create conditions affecting revenues and associated responsibilities. From these arrangements comes the potential for “double dip” which must be avoided to create clean claims and curtail any possible headaches. We’ve examined a great variety of situations from coast to coast. 5. Documentation has always been an issue with SR&ED. Is it an issue for these claims too? Government programs require documentation. It’s a simple fact. We have found that these SR&ED claims rely on concepts new to our Clinician Scientist clients. For example, the Canada Revenue Agency (CRA) uses their own definition of scientific research and has very specific requirements for related documentation. Furthermore, their requirements for evidence to support medical claims continue to evolve. 6. What is the importance of strategy in SR&ED claims? We have crafted strategies to maximize the dollars realized, minimize the effort of assembling claims and avoid unnecessary CRA headaches. It should also be realized that SR&ED claims will interact with both corporate and personal taxes. Clients care about their after-tax position, as well as cash flow, retirement needs and estate planning. Annual SR&ED rebates can be significant, but need to harmonize with other strategies to give the greatest benefit. Goulet Associates strives to supply one piece of the larger puzzle. 7. What are the upsides and downsides of SR&ED? The attraction of SR&ED is a sizeable and predictable financial reward related to research. Most claimants receive a refund cheque in the mail within a few months of filing. Downsides may include a documentation burden, the chance of SR&ED review scrutiny by CRA (not to be confused with a tax audit) and refunds being delayed by those reviews. Some reviews result in a reduction of the claim amount, though it is very rare to see a zero outcome. Maurice Goulet, SR&ED Tax Credit Consultant, Goulet Associates Vancouver, Regina, Toronto, www.GouletAssociates.com Hugh Faloon, CA, Tax Partner, Ginsberg Gluzman Fage & Levitz, LLP Ottawa, ON, www.ggfl.ca Unlocking SR&ED Research Funds Info@GouletAssociates.com | Vancouver, Regina, Toronto | 1.888.477.3373 | www.GouletAssociates.com GouletAssociates