Documenting Your SR&ED

Significant documentation should be recorded throughout the natural progression of your R&D to ensure you have created enough supporting evidence to satisfy CRA in the event of a review. This evidence will be used to support two aspects of your SR&ED claim: (i) the SR&ED work conducted; and (ii) the SR&ED expenditures claimed.

Evidence for SR&ED Work

With respect to the SR&ED work conducted, documentation should be produced as the work is performed. Documentation that is dated, signed and specific to the work performed will be the most valuable during a review. This supporting documentation can include:

  • Records of tests and results
  • Project planning documents
  • Documents on design of experiments
  • Experimentation plans
  • Design documents and technical drawings
  • Project records, laboratory notebooks
  • Design, system architecture and source code (for software development)
  • Records of trial runs
  • Project progress reports
  • Test protocols, data, results, analysis and conclusions
  • Final project reports or professional publications
  • Photographs, videos
  • Prototypes, samples
  • Scrap, scrap records
  • Activity records

Evidence for SR&ED Expenditures

Records that support the claimed expenditures should also be kept in order to justify the financial transactions made throughout the R&D program which were claimed as SR&ED expenditures. These records and documents can include:

  • Financial statements
  • Records
  • Ledgers
  • Journals
  • Vouchers
  • Receipts
  • Contracts, lease agreements
  • Purchase invoices and proof of payment
  • Accounting records
  • Time sheets
  • Records of resources allocated to the project
  • Payroll records

In summary, documentation is essential to any SR&ED claim and it is very important to ensure that evidence is generated as SR&ED is carried out. In the views of CRA, the best documentation is that which is created through internal processes that collect information and generate reports/evidence as the work is performed. Diligent bookkeeping as well as thorough and contemporaneous documentation is crucial during a review and could save your SR&ED claim if it is ever pulled for audit.

Author: Nicholas Ogrodnik
Position: Technical Advisor

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