5 tips to successfully apply for SR&ED Canada Tax Credit

“You are young and life is long and there is time to kill today.
And then one day you find ten years have got behind you.
No one told you when to run, you missed the starting gun.”
~ Pink Floyd

The Canadian government offers substantial support for research and development to Canadian companies. The Scientific Research and Environmental Development (SR&ED) programme is run by the Canada Revenue Agency (CRA), and they want you to present qualifying expenditures for SR&ED projects in a very specific way.

The technical narrative has to be just right!

So take our advice NOW, save yourself some time, and make your SR&ED claim process as smooth as possible by implementing these five simple productivity hacks:

SR&ED Tip 1: Automate time tracking as much as possible

We recommend time tracking 100% of your time but it doesn’t have to be a monotonous process. Set up time tracking categories and tags upfront (SR&ED and Non-SR&ED), and let software tools automate the rest.

Here are some automated time tracking tools to try out (if you aren’t already) this year:

• TimeCamp – when switched to automatic mode, tasks are tracked by keywords. It uploads your tasks and integrates nicely with systems such as Trello, BaseCamp and Asana.
• Harvest – Every business needs the ability to answer some essential questions: Where’s my time going? How much do my projects really cost? How much are they bringing in? Harvest harnesses the power of time tracking to make getting answers easier than ever.
• Toggl – looking for a minimal solution? Toggl is a free time tracking tool that helps you keep track of tasks and only requires one-click to start tracking. It also integrates with popular project management platforms such as BaseCamp, Asana and Trello.

SR&ED Tip 2: Stop discussing technical stuff over email

It’s easy to get bogged down by email. It’s also very time consuming to stay on top of organizing your email into folders and categories. 87% of employees mention they struggle to keep timesheets filled with punctuality each day and rely on email history and other documents to retroactively track time which leads to wasted productivity and inaccurate timesheets.

Here are some useful tools to improve your project communication tracking:

• Slack – (Now a part of Salesforce) has become indispensable for many businesses operating remotely during the coronavirus pandemic. The workplace collaboration software is primarily used by companies as an alternative to email, though some non-workplace groups have adopted it for communication as well. Instead of a full email inbox, users get chat messages instantly on the Slack web app, the desktop app or their phone. There is no place or time Slack messages can’t find you.
• HipChat – another alternative chat platform that enables one to one chat or groups. There is also video calling, screen sharing and enhanced security.
• Producteev – great platform that does real-time updates on projects and can help you manage your to-do lists.

SR&ED Tip 3: Schedule stand-up meetings, and limit them to less than 15-minutes

Research shows the most optimal time for meetings is 3pm on Tuesdays. It is still early in the week and leaves enough time to accomplish deadlines and finish other tasks before the end of the week, especially for remote workers that are racing to get things done before Friday so they can extend their weekends!

Want to streamline your project meetings even more? We recommend a weekly standing-only Online Video chat to discuss project challenges. This makes the focus simple, and makes the best use of your team’s time. Have someone record, or automatically video record, all of the ideas discussed and this will keep you on top of all of your documentation needed to fully support your SR&ED claim.

SR&ED Tip 4: Plan your SR&ED claim backwards and start now

You plan your project backwards, so why not apply the same approach to your SR&ED claim?

Set aside less than an hour to meet with your SR&ED advisor and plan out your claim from start to finish. The SR&ED tax incentive program can be complex, so a guide to SR&ED is worth it, even for small business! Being proactive and submitting your claim within the first six months of your fiscal year end will guarantee your claim is processed by the CRA and returned in much less than the allotted 120 days.

Be sure to review your current time tracking and documentation methods with your SR&ED advisor. They can recommend optimizations to your existing methods to ensure that your team’s documentation will meet the CRA’s strict documentation standards. The goal of reviewing this information is not to introduce brand new systems, but to expand on your team’s existing efforts so that they can continue to focus on doing what they do best and you can rest assured your documentation will support your claim in case of a CRA Review.

SR&ED Tip 5: Document your documentation

Make it as easy as possible for your eventual CRA reviewer to see how you’ve supported your claim with the documents you are providing. Document your SR&ED tax credit application with an index that shows what the purpose of each support document is, what project or sub-project name it relates to, and whether it shows “Uncertainty”, “Advancement”, or “Work Done”.

Always use standard naming conventions and language that are technical. Use the same Project or Sub-project Names as you used in your Time tracking system that you submitted to CRA to avoid any confusion, and link your time tracking entries to your index! If possible, automate the above suggestions!

“How?”, you say? Read on…

SRED Pro Tip: If you’re a Software or IT organization who is already using a lot of online tools to conduct your business, you likely don’t want to add more tools.

TaxEater automatically creates SR&ED timesheets for every employee in the organization based on their activity on email (Outlook & Gmail), cloud productivity software like Microsoft Office or Google Workspace, and other collaboration software (e.g. Microsoft Teams, Slack, Jira, GitHub, Dropbox).

TaxEater’s AI Tools ensure accurate & comprehensive SR&ED timesheets for the whole organization and captures all activity to maximize and document your SR&ED claim, while drastically reducing the overhead of collecting this information for all employees and contractors who are part of the claim.

A free trial is available for up to 5 employees with paid plans starting at $16 per employee monthly.

The Scientific Research and Experimental Development (SR&ED) program offers an amazing opportunity for Canadian companies to get support for their scientific or technological research through an investment tax credit. These 5 tips should help you successfully apply for the SR&ED Canada Tax Credit.