CA-Audit-Checklist - Swanson Reed | Specialist R&D Tax Advisors

Section 1: Project Eligibility

1. What was the main purpose of your project?

To achieve a technological advancement by resolving a specific scientific or technological uncertainty. To create a new product or process using standard, well-known industry practices. To conduct market research, routine engineering, or develop a business/administrative process.

2. Could a competent professional in your field have easily figured out how to achieve your project's technical goals?

No, the solution wasn't readily available and couldn't be deduced from publicly available knowledge or standard practices. Probably, with a bit of standard research and application of known engineering principles. Yes, it was a straightforward engineering, design, or software development task.

3. Did your team follow a systematic investigation or search?

Yes, we formulated specific hypotheses, tested them through experimentation/modelling, and drew logical conclusions. We did some informal trial-and-error but didn't formally document hypotheses or the iterative process. No, we built the final version from the start based on a clear project plan.

Section 2: Expenditure Qualification

4. How did you determine the T4 salary/wage costs included in your claim?

We used timesheets or a similar reliable method to track the exact time employees spent directly working on the SR&ED project. We made a reasonable, good-faith estimate of each person's time supported by secondary evidence (emails, commits). We blindly claimed a flat percentage of the entire technical team's salary costs.

5. For staff who were not 100% focused on SR&ED, how did you apportion their time?

Our records clearly separate their eligible SR&ED activities from their routine operational or administrative duties. We estimated a percentage split without detailed day-to-day records to back it up. We claimed their entire salary, even though they performed other routine duties.

6. What material costs are you claiming?

Only materials that were explicitly consumed or transformed during the execution of the SR&ED work (e.g., destroyed prototypes). We included some capital equipment or general tools, rather than strictly consumed materials. We claimed the cost of materials that went into the final, commercially sold product without adjusting for scrap/recovery value.

Section 3: Record Keeping

7. What kind of contemporaneous documentation do you have?

We have dated technical documents, test logs, code repositories, meeting minutes, and lab notes created as the work was happening. We mostly have after-the-fact summaries, general emails, and high-level project plans. We have very little documentation and would rely primarily on oral explanations from the staff involved.

8. Can you easily link the costs in your claim to the specific SR&ED activities?

Yes, our accounting system isolates SR&ED project codes/expenses, and we can provide a clear audit trail with invoices and payroll records for a CRA Financial Reviewer. It would take a lot of retrospective work to pull together and justify the financial evidence from different places. No, our SR&ED costs are heavily mixed in with our general operational expenses.

9. Who is the "Competent Professional" leading the technical aspects of the project?

We have an identified individual with relevant qualifications and field experience who can confidently explain the technical challenges to a CRA Research and Technology Advisor (RTA). The project was managed by a business manager or someone without a deep technical background in this specific scientific/engineering field. We don't have a designated technical lead for the project.

✅

Low Risk (0-10 points): Looking Strong

Your score is . Your answers suggest you have a robust process for claiming SR&ED tax incentives. Your contemporaneous documentation, cost tracking, and understanding of CRA eligibility criteria appear to be well-aligned with an RTA's and Financial Reviewer's expectations.

Next Step: Continue your excellent record-keeping practices. Ensure your technical narrative explicitly addresses the CRA's "Five Questions" to clearly tell the story of your SR&ED project.

⚠️

Medium Risk (11-25 points): Caution Needed

Your score is . Your claim may have merit, but there are potential weaknesses a CRA reviewer could challenge, particularly around contemporaneous documentation or the apportionment of labour costs. You will likely be asked to provide more detailed evidence during a review.

Next Steps: Focus on organizing whatever documentation you have (emails, commits, logs). Review your T4 salary apportionments to ensure you have a logical, defendable basis for any estimates made. Consider having your claim reviewed by an SR&ED specialist prior to filing.

🛑

High Risk (26+ points): Urgent Action Required

Your score is . Your answers indicate a high risk of your claim being rejected or adjusted in a CRA review. There appear to be significant gaps in establishing technological uncertainty, tracking eligible costs, or providing supporting evidence. Submitting a claim in this state could trigger an in-depth audit.

Next Steps: Do not submit your claim without a fundamental overhaul. Critically re-evaluate whether your project meets the strict CRA definition of SR&ED. You should urgently seek advice from a reputable Canadian SR&ED tax consultant.

We're not around right now. But you can send us an email and we'll get back to you, asap.

SR&ED Claim Review Readiness Tool

Disclaimer