Claim SR&ED tax incentives - How to support your claim
To support your scientific research and experimental development (SR&ED) claim, you need to keep documents and other information to show that eligible work was performed and allowable expenditures were incurred in the year for which you are filing your claim. This information should convey what work was done, who was involved with the work, when the work was conducted, and how you calculated the expenditures associated with the work.
If the Canada Revenue Agency selects your SR&ED claim for a review, we will ask you to provide the supporting information that you generated while the SR&ED work was being carried out. We may also ask you to explain how you used your supporting information to determine the dollar amounts you put on the claim form.
Supporting your SR&ED work
The information used to support SR&ED work is often called "supporting evidence." Documents that were generated when the work was being carried out are the most common, but supporting evidence can also include items such as photographs, videos, scrap, or other artefacts that relate to the work.
The best supporting evidence is documentation that is dated and specific to the work performed. However, we will accept various forms of evidence. Most importantly, the evidence you keep must support the information you provided in Part 2 of Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim.
Supporting your SR&ED expenditures
You must also keep complete and organized records that support the expenditures you claim. How long to keep your records can vary but, in general, all required records and supporting documents must be kept for a period of six years from the end of the last tax year they relate to. For general information on records needed to support financial transactions please visit Keeping records. Records and documents that may be asked for during a review include financial statements, ledgers, journals and vouchers, including electronic records. We may also ask for source documents such as receipts, contracts and general correspondence. In addition to the above general financial records, keep any related documents and information that support the specific expenditures claimed on Form T661.
Examples of supporting information
Your business environment influences the types of information that you will generate. Keep any information and items that you believe will support your SR&ED claim.
Examples of supporting information for SR&ED work and expenditures include (but are not limited to):
- project planning documents
- design of experiments
- design documents, technical drawings
- project records, laboratory notebooks
- design, system architecture, source code (software development)
- records of trial runs
- project progress reports
- minutes of project meetings, virtual meeting chats
- whiteboard drawings
- test protocols, data, results, analysis, conclusions
- final project report, professional publication
- photographs, videos
- prototypes, samples
- scrap, scrap records
- contracts, lease agreements
- records of resources allocated to the project
- time sheets, activity records, payroll records
- purchase invoices, proofs of payment
- accounting records
Many of the examples above can be used to support both the SR&ED work and the expenditures. See Appendix 2 of Guide T4088, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, for more details on the different forms of supporting evidence for SR&ED work and financial records to support your expenditures.
If you are a first-time claimant, you might not have a lot of information to support your claim. Don’t let this discourage you from filing a claim, as you may still have performed some eligible work. Keep any information and other physical items that you feel may support your claim. We can help you identify the evidence that supports your SR&ED work and related expenditures.
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