In my role as a scientific adviser specializing in tax credits, I cannot emphasize strongly enough the need to support a claim with sufficient evidence. It’s essential for those involved in SR&ED activities to take precautions to avoid problems related to an audit by the Canada Revenue Agency (CRA). Specifically, a company wishing to obtain a tax credit for Scientific Research and Experimental Development (SR&ED) at the federal level needs to fill out the Form T661. This form should include all documents relating to the applicant’s activities. For this post, our interest focuses on the “Documentation and other evidence to support your SR&ED claim” section.

Screenshot of the “Documents and Other Evidence” section in the T661.

When a SR&DE credit application is selected for review, it is mandatory to provide certain supporting documents. The evidence requested usually take the form of documents related to the work, which must be dated and signed. Here is also an overview of key elements that can be used as evidence:

– Individual time sheets that allocate time to SR&ED and non-SR&ED work

– The supervisors’ summaries document the amount of SR&ED undertaken by the R&D teams for a given period. To be effective, the summaries should be updated regularly.

– The resource-planning element of a development plan may identify the resources associated with specific work to be undertaken in the claim period.

This documentation must be created at the same time as the SR&ED work is performed. Then, good document management practices must be developed, which requires the development of discipline. However, such discipline may not be acquired overnight. Although the preparation of these documents leads to an increase in workload and energy and funds dedicated to these activities, it will provide you the necessary documentation to support your claim with the CRA.

The preparation and storage of these documents can be achieved in different ways. For example, it could be by writing a diary, for gathering information in a collective memory or by creating a Wiki site.

I would like to emphasize that transparency and honesty are two essential qualities when completing Form T661. Otherwise, the consequences can be considerable, sometimes even leading to the cancellation of a future credit.

To obtain more specific information on eligibility criteria, you can consult the guide for claimants. Also, you can to contact one of our consultants who will be happy to answer your questions.