Introduction 

Too often, companies begin thinking about the Scientific Research and Experimental Development (SR&ED) tax credit only once their project is completed—or when it’s already too late to collect the right evidence. However, planning for the SR&ED claim as early as the project planning phase is a winning strategy. It increases the chances of success and greatly simplifies claim preparation.
In this article, learn how to build a strong SR&ED file starting from day one of your R&D project.

Understand CRA Requirements Before You Begin

To be eligible for the SR&ED tax credit, a project must meet the three criteria defined by the Canada Revenue Agency (CRA):

• Technological advancement: The project must aim to generate new knowledge or improve existing technology.
• Scientific or technological uncertainty: The outcome of the work must not be predictable in advance.
• Systematic investigation: The work must follow a structured and iterative approach that includes experimentation and documentation.

These criteria directly influence activity planning, goal setting, and documentation. Integrating them from the beginning helps avoid unpleasant surprises during claim review.

Step 1: Clearly Identify the Project’s Technical Objectives

Technical objectives are at the core of any SR&ED file. They must be distinct from commercial, aesthetic, or functional goals.

• Bad example: “Create a more attractive and user-friendly app.”
• Good example: “Develop an analytics engine capable of processing real-time data with a latency below 100 ms.”

The more specific, measurable, and technologically grounded the objectives are, the easier it will be to assess eligibility.

Step 2: Set Up a Documentation System from Day One

Documentation is critical to support eligible SR&ED activities. Ideally, it should be generated in real time:

• Detailed timesheets for each team member (tracking hours spent on eligible tasks).
• Technical logbook: daily notes, experiment results, challenges encountered.
• Use a collaborative tool (e.g., Notion, Google Docs, Confluence) to centralize information.

Strong documentation proves the existence of a systematic method—a non-negotiable requirement for CRA.

Step 3: Track Eligible Expenses Continuously

Another key aspect of the SR&ED file is documenting eligible expenditures. It’s recommended to:

• Create a dedicated SR&ED budget in your accounting system.
• Retain all invoices, pay stubs, contracts, and purchase receipts related to the project.
• Assign a person responsible for tracking and archiving.

This rigorous tracking will help maximize your claim amounts while minimizing audit risks.

Step 4: choose the right calculation method (proxy or traditional)

There are two methods for calculating SR&ED expenditures:

• Traditional method: Claim actual costs (salaries, subcontracting, materials, etc.).
• Proxy method: Allows a fixed overhead percentage claim (currently 55% of eligible salaries).

Tip: Consult with an SR&ED advisor to determine the best method for your structure and projects. Discover more in our article Everything you need to know about eligible SR&ED expenses.

Step 5: draft a preliminary technical report in parallel

Rather than writing the technical report at the end of the year, it’s much more efficient to build it progressively:

Suggested structure:

• Project background
• Technological or scientific challenge
• Experimental approach used
• Results achieved (successes or failures)

This approach lightens the workload at filing time and ensures more accurate information.

Bonus: tools and best practices to automate tracking

To streamline SR&ED project and documentation management, consider integrating tools such as:

• Jira, Trello, or Notion with SR&ED tags to track technical tasks.
• Timesheet templates aligned with CRA requirements.
• Smooth collaboration between technical, accounting, and leadership teams for consistent tracking.

Automation and process discipline can save significant time and improve file quality.

Conclusion

In summary, building a strong SR&ED file starts from day one of the project.

Key steps to remember:

• Understand CRA requirements
• Define precise technical objectives
• Document systematically
• Track expenses rigorously
• Build the technical report progressively

Don’t leave documentation until the end—it’s as important as the innovation itself.

Launching a new project? Contact our experts for an assessment or pre-project SR&ED audit. Let’s ensure the success of your claim—together.

Sources

• https://www.canada.ca/fr/agence-revenu/services/scientifique-recherche-developpement-experimental/rsde-admissibilite.html
• https://www.canada.ca/fr/agence-revenu/services/scientifique-recherche-developpement-experimental/rsde-travail-admissible.html
• https://www.canada.ca/fr/agence-revenu/services/scientifique-recherche-developpement-experimental/rsde-documentation.html
• https://www.canada.ca/fr/agence-revenu/services/scientifique-recherche-developpement-experimental/politiques-rsde/politiques/documentation.html
• https://www.bdc.ca/fr/articles-outils/technologie/investir-technologie/comment-rendre-dossiers-rsde-imbattables
• https://www.canada.ca/fr/agence-revenu/services/scientifique-recherche-developpement-experimental/rsde-methodes-calcul.html
• https://www.canada.ca/fr/agence-revenu/services/scientifique-recherche-developpement-experimental/rsde-depenses-admissibles.html
• https://nrc.canada.ca/fr/financement/programmes/aide-innovation-industrielle
• https://www.canada.ca/fr/agence-revenu/services/formulaires-publications/publications/t4088.html
• https://ised-isde.canada.ca/site/initiative-dadoption-numerique/fr