In short
- An SR&ED consultant helps you find eligible work, write Form T661 and defend the claim. You still have to supply the records.
- Consultants are often paid a share of the credit (contingency), a flat fee or an hourly rate. The T661 asks how your preparer is paid.
- Hiring one makes most sense for a first claim, a large or complex claim, or a team with no time to write it up.
- Whoever prepares the claim, organized records of the work and the hours make it faster, cheaper and easier to defend. That is what Sredify is for.
What an SR&ED consultant does
An SR&ED consultant (often searched as SRED consultant) is a firm or specialist that helps companies prepare their claim for the SR&ED tax credit. Some are accounting firms with an SR&ED group, others do nothing but SR&ED. The work usually covers:
- Finding the eligible work: interviewing your team to spot projects that meet the SR&ED test, and leaving out routine work.
- Writing the project descriptions in Form T661: the uncertainty, the work you did and what you learned.
- Working out the costs: salaries, materials and contracts, and which method to use.
- Filing the T661 and the credit schedule with your accountant, before the deadline.
- Supporting you in a CRA review, if the CRA asks questions about the claim.
What a consultant cannot do for you
A consultant can only describe the work you can show. They were not there when your team ran into the problem, tried things and failed. To write the claim they need your records: what the work was, who did it, when, and how many hours it took.
Without those records, the consultant has to rebuild the year from interviews and memory. That takes your team's time, often produces estimates instead of real figures, and gives the CRA less to rely on if it reviews the claim.
Sredify puts you in control of your claim
Sredify is designed so you can prepare your own SR&ED claim, without needing a third party consultant. If you still prefer to hire one, Sredify makes their job much smaller: the work, the people and the hours are already tracked from the tools your team uses, so your consultant starts from an organized claim package instead of a blank page. It will make your life, and theirs, a lot easier.
How SR&ED consultants charge
There are three common ways to pay a consultant. Rates differ a lot between firms, so ask for a written quote and compare like with like.
- Contingency
- How it worksA percentage of the credit you receive
- Worth checkingWhether the percentage applies to the federal credit only or provincial credits too, and what happens if the CRA reduces the claim
- Flat fee
- How it worksA fixed price for the claim
- Worth checkingWhat is included, such as CRA review support
- Hourly
- How it worksYou pay for the time spent
- Worth checkingAn estimate of hours, and who on your team they will need
| Fee model | How it works | Worth checking |
|---|---|---|
| Contingency | A percentage of the credit you receive | Whether the percentage applies to the federal credit only or provincial credits too, and what happens if the CRA reduces the claim |
| Flat fee | A fixed price for the claim | What is included, such as CRA review support |
| Hourly | You pay for the time spent | An estimate of hours, and who on your team they will need |
Whatever the model, the Income Tax Act requires claim preparer information on the SR&ED form: who helped prepare it and how they are paid. Leaving it out or getting it wrong can bring a $1,000 penalty, shared by the company and the preparer. Your own employees who prepare the claim as part of their job are not claim preparers.
When hiring a consultant makes sense
- Your first claim. You do not yet know what the CRA expects, and the write-up is new to everyone.
- A large or complex claim, for example several projects, contractors, or work done for a client.
- No time on the team to learn the rules and write the project descriptions.
- A CRA review is coming and you want someone who has been through many of them.
Many companies hire a consultant for the first year or two, learn what a good claim looks like, then bring it in house with their accountant.
Doing it in house instead
There is no rule that you need a consultant. Many companies prepare the claim themselves and have their accountant file it with the corporate tax return. This works best when:
- Someone on the team understands the work well enough to explain the technical uncertainty in plain words.
- You keep records during the year, not after it ends.
- Your accountant is comfortable with the credit schedule and the cost rules.
Sredify is built for this. It finds the work that may qualify, ties every hour to real activity, and builds a claim package with the T661 write-up your accountant can review.
Help from the CRA
If it is your first claim, or your first in 3 years, the CRA may select you for its First-Time Claimant Advisory Service after you file. It is a virtual meeting where SR&ED officers explain eligible work, allowable costs and the records to keep. It is not a review of your claim.
How to choose an SR&ED consultant
- Ask about your kind of work. Have they prepared claims for companies doing similar technical work?
- Get the fee in writing, including what happens if the CRA reduces the claim and whether review support costs extra.
- Ask what they need from you, and how much of your team's time it will take.
- Ask how they handle a CRA review, and who will be in the room.
- Keep ownership of your records. The evidence is yours, and you will need it again next year whoever prepares the claim.
Frequently asked questions
Do I need an SR&ED consultant to claim?
No. Any company can prepare its own claim and file it with its tax return. A consultant can help with a first claim or a complex one, but the claim still depends on your records.
How much does an SR&ED consultant cost?
It depends on the firm and the claim. Consultants commonly charge a percentage of the credit, a flat fee or an hourly rate. Get a written quote and compare what each one includes.
Do I have to tell the CRA I used a consultant?
Yes. The SR&ED form asks for claim preparer information: who helped prepare the claim and how they are paid. Missing or wrong information can bring a $1,000 penalty.
Can I use Sredify and a consultant together?
Yes. Sredify is built so you can handle the claim yourself, but if you hire a consultant, the work, the people and the hours are already tracked and ready, so the claim takes them far less effort than rebuilding the year from interviews.
Does the CRA offer free help?
First-time claimants, and companies that have not claimed in 3 years, may be selected for the CRA's First-Time Claimant Advisory Service after filing. It gives guidance for future claims but does not review the claim.
Prepare your SR&ED claim with Sredify
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- Income Tax Act s. 162(5.1) to (5.3): claim preparer information and penalty
- CRA: First-Time Claimant Advisory Service
- CRA: SR&ED tax incentive program
This guide explains the general rules. It is not tax advice: talk to your accountant or SR&ED preparer about your own claim.