The 5 Documents That Prove SR&ED

Every SR&ED should be backed by documentation. The CRA often requests documentation to support a project. This can be financial and/or technical information. While financial information tends to be straightforward (financial statements, invoices, etc.), illustrating your technical process can be difficult. By matching documentation to the 5 steps of SR&ED you can ensure all the technical requirements are met.

Step 1a) Define Standard Practice

Before starting a project you probably search to see if there are any readily available solutions to your problem

Internet searches

The first place most people start is Google.  Articles showing that there is no standard practice or knowledge available that solves your problem.

To save the articles you can print to pdf or use a service like Evernote Webclipper. Once saved you can upload the evidence directly to RDBASE.

Patents

You may want to search patents to see if there is a product or process similar to what you are trying to create.  Google Patents is a great service that lets you search through millions of patents. Again, when you find something relevant, save & upload.

Inquiries to Experts

If you contact suppliers, customers, or other experts in the field save their response. Experts give a good sense of what knowledge is available to those in the field. Create a SR&ED folder in your email client and keep their responses.

Potential Components

Maybe you’ve found some parts or methods that you might be able to use but they don’t provide the full solution or are too expensive. Save the specs/article and make sure it illustrates why it’s not a full solution.

Competitive Products

Say your competitor has come up with a new product and you want to catch up to them. The solution isn’t readily available because it is proprietary to your competitor. Show what they’ve done and how you want to improve upon it.

Step 1b) Objectives > Standard Practice

Show how you plan to improve upon the current standard.

Look for a document that:

–          Outlines quantified objectives,

–          Discusses what the project is to achieve

–          Is dated near the start of the project

Possible sources of this documentation include:

–          Project planning documents

–          Emails

–          Meeting minutes

–          Design of experiments

Step 2 Uncertainty/Hypothesis

A test matrix or testing plan is a spreadsheet with variables/conditions to be tested as the column/row headers and the results of each test filling the spaces. Example:

	Temperature 1	Temperature 2	Temperature 3
Time 1	Result 1-1	Result 1-2	Result 1-3
Time 2	Result 2-1	Result 2-2	Result 2-3
Time 3	Result 3-1	Result 3-2	Result 3-3

Showing how the variables were tested will prove:

– You were uncertain how to meet your objectives,

– had a systematic testing plan in place &

– you had a hypothesis how you could reach your goals.

This is the most important of all the supporting documentation. Not only with this backup all of your activities, it will serve as the starting point for the SR&ED project.

Step 3a) Systematic Investigation

The objective here to illustrate the difficulties you had during the project.

Pictures/video are great for showing issues that occurred on the shop floor. Add notes to the pictures to tie them back to the variables and comment on what went wrong.

Other documentation such as worker logs, time sheets, test data, or results are great to back up the work done and the costs claimed but don’t always prove SR&ED.

Step 3b) Technological Conclusions

This can be the hardest to find because analysis of the results is often in the managers head or discussed verbally. What is required is a document stating what was learned from the experiments in relation to the variables tested. Look for this in:

– in-term or  final reports,

– emails discussing results ,

– or meeting minutes. 

Summary

The best thing to do is establish a good documentation practice and follow it during the project. This includes:

–          Monthly SR&ED project meetings/reports

–          A physical SR&ED folder or online storage such as RDBASE

–          An understanding of which documents relate to SR&ED