Naturally occurring documentation

CRA’s instructions on documentation have not changed; the new guidance material still advises that “records generated during the normal course of a project should be sufficient to support a claim for SR&ED”. This does not mean (if it ever did) that program users can assume their regular paperwork, whatever it happens to be, will meet CRA’s evidence requirements. While there may be organisations whose regular record-keeping does reach that standard, for most companies some extra effort is needed. 

A more useful interpretation takes into account the new 5-step approach for evaluating projects as SR&ED. Since generating appropriate records is now regarded as a defining characteristic of a SR&ED project, a project with insufficient supporting evidence is not just unsubstantiated, it is ineligible. With that in mind, CRA’s advice is actually saying that if a project doesn’t, as part of its normal operation, generate the type of documentation required to support a SR&ED claim, then it can’t be a SR&ED project. This includes contemporaneous reports of objectives, uncertainties, hypotheses etc., as necessary to demonstrate that the scientific method was followed.  

Program users need to take a fresh look at the records currently being produced, and evaluate them in the light of current SR&ED requirements. This effort is worthwhile, because claims with inadequate records are likely to be disallowed. Operating procedures then need to be adjusted so that generation of documentation to meet the requirements becomes part of the regular development process. These additional records should be designed to enhance the development process in a way that provides the additional information, rather than address SR&ED issues directly - CRA have made it clear they do not wish to see documentation that was produced as claim support rather than as part of the SR&ED process.