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Companies can receive a refund from the Canada Revenue Agency for a large part of their research and development (R&D) cost. The Scientific Research and Experimental Development programme (SR&ED) tax incentive programme offers generous tax credits for the research you do, but only if your documentation meets the requirements.
The official guide to the SR&ED claim form makes it seem that you can do without documentation. Appendix 2 states “the lack of documentary information should not discourage you from making an SR&ED claim”. In practice, however, the CRA will not accept your claim for a SR&ED tax credit if the work done can’t be substantiated with documentary evidence.
It is important to remember that the programme funds SR&ED work performed, not the results of those activities. In fact, you can get funding for a research project even when the goal of the project is not achieved, as long as you follow the scientific method for your research: formulating a hypothesis, defining and then executing the steps to test the hypothesis, analyzing the results and formulating a conclusion. This means that the documentation of your research project should also focus on the process you have mapped out, and the effort you make in each individual step.
This article gives an overview on the technical documentation required for SR&ED tax credit applications.
It is best to establish a clear process for documenting your SR&ED project, before you even begin the project! This allows you to be clear on what information needs to be tracked and when, and to ensure the consistency that the CRA is looking for.
The best way to approach this is to collectively plan the documentation with the assistance of a SRED consultant, to make one person responsible for the collection of all documentation on a daily basis, and to identify a central location where all documentation will be kept.
Here is an overview of the documents that you can use to support your SRED claim.
It is best to collect, date and sign all documents relating to the research work:
Here is an overview of the different types of supporting evidence and how they relate to each of the elements of your research project:
| Supporting Evidence | Scientific or technological advancement sought | Technological obstacles | Work done: experimentation, analysis, support work, progress | Start and end dates | Employees or people involved |
|---|---|---|---|---|---|
| Project planning documents | X | X | X | ||
| Records of resources allocated to the projects, time sheets | X | X | X | ||
| Design of experiments | X | X | X | ||
| Design documents, computer-aided design (CAD) and technical drawings / specs | X | ||||
| Project records, laboratory notebooks | X | X | |||
| Design, system architecture and source code (software development) | X | X | |||
| Records of trial runs | X | X | X | ||
| Project progress reports | X | X | |||
| Minutes of project meetings | X | ||||
| Test protocols, test data, test results | X | X | X | ||
| Analysis of test results, conclusions | X | X | |||
| Final project report or professional publications | X | ||||
| Photographs and videos | X | X | X | ||
| Prototypes, samples, code | X | X | X | ||
| Scrap, scrap records | X | X | |||
| Contracts | X | X | |||
| Others |
We are a full-service professional SR&ED Consulting Firm specialized in the Medical Science, Software and Manufacturing industries. We have a 95% success rate in getting CRA to refund up to 65% of your research and development costs.
We engage with you to assess the technical and financial viability and make sure your claim gets approved by CRA without an audit. We have submitted $50M in claims to the CRA. Over 320 claims were accepted as filed, for an average $146,000 per company.
Unlike larger SR&ED consulting firms, we offer full service from an individual consultant who gets to know your team and fully manages your CRA claim. We don’t expect you to do the heavy lifting, which means maximum results with minimal input from your team so you can focus on your business.
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