Introduction: Understanding the importance of contemporaneous documentation in the Scientific Research & Experimental Development (SR&ED) process is crucial for maximizing your tax credit claims. The Canada Revenue Agency (CRA) emphasizes the significance of documentation that is dated, signed, and specific to the work performed. In this guide, we explore what contemporaneous documentation is, why it’s essential, and practical strategies for achieving it during the SR&ED process.
Why Contemporaneous Documentation Matters: Contemporaneous documentation, defined by the CRA as “documents generated as the SR&ED was being carried out,” serves as the best supporting evidence for your SR&ED claim. Unlike post-project documentation, contemporaneous records provide real-time insights into the work performed, increasing credibility during CRA reviews.
Learn from Case Studies: Referencing cases like Dock Edge + Inc. v. The Queen (2019), where the absence of thorough and contemporaneous documentation led to an unsuccessful appeal, highlights the critical role proper documentation plays in the success of an SR&ED claim.
How to Contemporaneously Document SR&ED Work: Waiting until the end of a project to gather documentation is a risk. To ensure a seamless process and avoid potential setbacks, implement the following strategies in your company:
- Utilize Project Management Software:
- Leverage project management tools like Basecamp, JIRA, or Zoho Projects to track SR&ED activities in real-time.
- Tailor software choices based on the nature of your SR&ED projects, especially in software development.
- Hold Regular Technical Meetings:
- Document uncertainties, work performed, and advancements discussed in technical team meetings.
- These minutes serve as valuable contemporaneous records for both T661 completion and documentation purposes.
- Track Hours Spent on SR&ED:
- Establish a time tracking process to ensure accurate allocation of time to SR&ED eligible work.
- Simple time tracking sheets can provide a clear breakdown of hours dedicated to the project.
- Keep Logbooks Aligned with Timesheets:
- Complement timesheets with logbooks, summarizing daily SR&ED activities.
- Presenting both when and what was done enhances the validity of your claim.
- Assign Dedicated Personnel:
- Designate individuals or a team responsible for collecting, assembling, and filing daily reports with supporting documents.
- Ensure swift addition of daily reports to the SR&ED file for comprehensive documentation.
By adopting these proactive measures, you not only streamline the documentation process but also position your company favorably in the eyes of the CRA during reviews.
