Support Your SR&ED Claim: SR&ED Tracking 101

Anxious about whether your SR&ED claim will be approved by the CRA? You better ensure your teams’ documentation practices are up to speed. We are here to help.

SR&ED Eligibility Criteria

Remember, for an R&D project to qualify for SR&ED it must meet the following criteria:

  • technological advancement
  • technological uncertainty
  • technical content

How do you prove to the CRA that your project meets these three criteria? Documentation!

Documentation Requirements

The CRA requires that documentation must be contemporaneous, meaning that it’s documented as the discovery was made in the moment. Not 6 months later.

Dating documentation helps overcome this. The final requirement is that your documentation highlights the obstacles and challenges your team faced throughout the project. It’s not just about snapping a picture of the whiteboard meeting minutes or version control; it’s about showing what you didn’t know and how you worked through it in an iterative process.

Your documentation should help you answer the following questions:

  • What was the work performed?
  • What were the challenges?

The more precise your documentation, the better. “This feature didn’t work today,” is not going to help you if/when your project gets reviewed by the CRA.

Time Tracking

Time tracking is perhaps the most important piece of documentation you could create! Your time sheets prove what you spent your time on as well as how much time you spent on them.

Since your tax credit is calculated as a percentage of the salary/money spent R&D.  The CRA is looking for a clearly detailed outline of what was spent and whether your documentation supports your claim.

The scary part is that poor documentation and time tracking could drastically reduce your potential claim.The CRA has and will fully deny claims that were poorly documented. Don’t let that be your team!

SR&ED Tracking Tips

1. Educate your team on what qualifies and what doesn’t

Gather your teams and discuss what projects and features qualify for SR&ED. This clarity will help provide more direction and will help your teams understand what/why they need to track their challenges in more detail on those projects.

2. Track 100% of your time by activity

Take time tracking a step further and document 100% of your time.  For a software development team we recommend setting up the following time-tracking activities:

  • Development
  • Testing
  • Project Management
  • Technical Analysis
  • Technical Requirements
  • Admin

3. Discuss project challenges in your weekly scrum meeting

Many teams meet once a week or more. During a team meeting, add a discussion item around challenges and delegate one person to take notes. (Be sure to date them!)

If you’re still worried about your documentation or time tracking system, give us a shout. We’ll let you know which projects are SR&ED eligible and how you can best document to support a future claim.

Bonus: click here to download this 20-page SR&ED Guide to learn everything you need to know to prepare a successful claim.

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