Updated to Reflect New Policies (2024) 

*** Some of the policies referenced were updated since the original publication date of this post. This article has been updated and is accurate as of July, 2024. *** 

The Canada Revenue Agency (CRA) offers two distinct services to those who want to obtain a ruling on their SR&ED tax incentive claim before they submit their application; a pre-claim consultation (PCC) or a  pre-claim review (PCR). The following article will discuss the similarities and differences between the two services.

What is the PCC?

The PCC allows you to discern “if there is scientific research and experimental development (SR&ED) work in any of your projects before you send an SR&ED claim.”¹

In order to apply, you must meet the basic requirements for claiming SR&ED tax incentives. This includes the following:

“scientific research and experimental development” means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis and that is

(a) basic research, namely, work undertaken for the advancement of scientific knowledge without a specific practical application in view,

(b) applied research, namely, work undertaken for the advancement of scientific knowledge with a specific practical application in view, or

(c) experimental development, namely, work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto,

and, in applying this definition in respect of a taxpayer, includes

(d) work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing or psychological research, where the work is commensurate with the needs, and directly in support, of work described in paragraph (a), (b), or (c) that is undertaken in Canada by or on behalf of the taxpayer,

but does not include work with respect to

(e) market research or sales promotion,

(f) quality control or routine testing of materials, devices, products or processes,

(g) research in the social sciences or the humanities,

(h) prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas,

(i) the commercial production of a new or improved material, device or product or the commercial use of a new or improved process,

(j) style changes, or

(k) routine data collection.²

Also, the projects for which you are requesting a consultation must:

• Be completed or in progress.
• Were not already reviewed and given an eligibility determination.
• Do not involve an issue that is under notice or objection or in litigation.³

You can additionally only request a PCC on a maximum of three projects per tax year. The date of your request for a consultation can be no later than four months after the end of the tax year in which you did your work.⁴

Based on the information you provide for the consultation, SR&ED reviewers will:

• identify the research and development work that qualifies as SR&ED
  provide advice on the supporting documents you need to keep
  answering your questions, and offer advice and recommendations
  provide a decision in a written report, which will identify the work that qualifies for SR&ED tax incentives. The report will not include decisions on the extent of eligible work or the allowable expenditures.⁵

To obtain this consultation, you must complete and send an online pre-claim consultation request form. After you send your completed form, a Canada Revenue Agency (CRA) officer will call you to ask for more information to help the CRA decide if you qualify for a consultation.

You need to:

• Give the same contact and business information in the consultation request and during your conversation with the CRA officer.
• Have your business and product information nearby to answer the officer’s questions.⁶

What is the PCR?

Note: as of July, 2024, PCR has been retired from the CRA website. The following information is for historical and educational purposes only. Pre-claim consultations may still be requested.

The PCR provides more certainty around whether your project qualifies for SR&ED as it is legally binding. According to the CRA, “You will get a determination on the eligibility of your R&D work, and how much of your work and associated expenditures qualify for the SR&ED tax incentives before submitting your claim.”⁷

However, one of the following must be conducted or used before you can engage the PCR service:

• A PCC.
• The First-Time Claimant Advisory Service.
• An SR&ED review.⁸

Also, you must only submit more than 20 projects for the current tax year and have only one or no prior SR&ED claim under review at any point during the current year.

SR&EDucation.ca has already provided some guidance surrounding the PCR. For more detail, consult our page on Pre-Claim Review Vs. Pre-claim Project Review: A Comparison.

You can fill in and submit the Request for a Pre-Claim Review form to receive this service.

Timelines

The following timeline illustrates the series of events that occur if you apply for both a PCC and a PCR.

Summary

Both the PCC and PCR are effective services that will help you in preparing your SR&ED claim. However, like any service, one needs to know how to apply for it and what conditions you need to meet. This article has shown how similar but different the PCC and PCR are, so be sure that you apply for the right service based on your eligibility requirements.

Keep in mind that these services do not guarantee your SR&ED claim will be exempt from review. Upon review of the CRA’s website, it appears the PCR has more legal weight than the PCC. The CRA states the PCR gives “the certainty that your claim will be accepted as filed when it is received by the CRA.”⁹, however, there have been cases of claimants who used the PCR service only to have their SR&ED claims ultimately denied.

The Pre-Claim Consultation is just that, a consultation. It is undoubtedly a wonderful tool for gaining knowledge and guidance of the SR&ED program. Through it, the CRA gives “advice and recommendations”¹⁰. It is a great idea to take advantage of the PCR and PCC services if you are able to, but be sure to also review the current eligibility guidelines and other SR&ED policies and procedures so there are no unwelcome surprises after you submit your claim.

What do you think about the PCC and PCR? Have you used either or both?

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