How a Typical SR&ED Review / Audit Happens

When the Canada Revenue Agency reviews a claim, they usually conduct a technical review and a financial review:

Technical Review

Performed by a CRA Research & Technology Advisor (RTA) who evaluates whether the work qualifies as SR&ED.

Financial Review

Performed by a Financial Reviewer (FR) who validates the expenses claimed.

Both reviewers may request the documents listed above.

CRA strongly prefers contemporaneous documentation (created during the project). Documents written after the fact are often viewed as weaker evidence.

During an SR&ED review, a Research & Technology Advisor (RTA) from the Canada Revenue Agency evaluates whether the work truly qualifies as R&D under the Scientific Research and Experimental Development (SR&ED) Program.

To do this, they typically structure the audit around five key technical questions.

The Five Key Technical Questions Asked During an SR&ED Audit

1. What was the technological uncertainty?

The reviewer first determines whether there was a real technological challenge.

They want to know:

• What problem could not be solved using existing knowledge?

• Why standard engineering or routine development was insufficient?

• What technological limitations existed at the start?

Example

• A software company attempting to process real-time data at a scale that existing architectures could not support.

2. What technological advancement were you trying to achieve?

The RTA checks whether the work attempted to create new or improved technology.

They evaluate:

• Whether the project aimed to advance the state of knowledge

• Whether the solution required innovation beyond existing methods

The advancement may be incremental, but it must still extend technological capability.

3. What systematic investigation or experimentation was performed?

This question verifies that the project followed a structured experimental process.

The reviewer expects to see:

• Hypotheses

• Design alternatives

• Testing procedures

• Iterative experimentation

This confirms the work followed a scientific or engineering method, not trial-and-error coding.

4. What were the results of the experiments?

The RTA wants evidence that experiments produced measurable outcomes.

They review:

• Test results

• Performance benchmarks

• Prototype outcomes

• Data analysis

Importantly, both successful and failed experiments count.

Finally, the reviewer determines whether the project expanded technological knowledge.

They ask:

• What did the team learn?

• Did the experiments resolve the uncertainty?

• Did the work generate new techniques, methods, or insights?

Even if the final product failed commercially, the project may still qualify if it generated new technical understanding.

5. How did the results contribute to technological advancement?

Finally, the reviewer determines whether the project expanded technological knowledge.

They ask:

• What did the team learn?

• Did the experiments resolve the uncertainty?

• Did the work generate new techniques, methods, or insights?

Even if the final product failed commercially, the project may still qualify if it generated new technical understanding.

How RTAs Evaluate the Answers

The CRA typically checks whether the project meets the three core SR&ED criteria:

1. Technological uncertainty existed

2. Systematic experimentation was conducted

3. Technological advancement was attempted

If the answers to the five questions clearly demonstrate these three elements, the claim is far more likely to be accepted. Companies that structure their SR&ED documentation around these five questions often have much smoother reviews with the Canada Revenue Agency.

5 Documents CRA Reviewers Expect During an SR&ED Audit

1. SR&ED Technical Project Descriptions (Form T661)

This is the core document submitted with the claim.

It explains:

• The technological uncertainty

• The experimental approach

• The results of the work

CRA reviewers check whether the project truly involved scientific or technological advancement, not routine development.

Typical sections

• Problem definition

• Technological obstacles

• Experiments performed

• Conclusions or learnings

2. Experimentation Records and Development Logs

CRA expects proof that systematic experimentation actually occurred.

Examples include:

• Engineering notebooks

• Software development logs

• Git commit histories

• Test results

• Prototype iteration notes

These records show the trial-and-error process behind the R&D.

3. Employee Time Tracking

Since employee wages are usually the largest SR&ED cost, reviewers check how time was allocated.

Typical documentation:

• Timesheets

• Project time tracking reports

• Payroll summaries

• Role descriptions for engineers and developers

This helps CRA confirm which hours were eligible SR&ED work.

4. Financial Records Supporting the Claim

CRA must verify that the claimed expenses are accurate.

Common records requested:

• Payroll registers

• Contractor invoices

• Material purchase receipts

• Accounting ledgers

• General ledger extracts

These documents confirm the dollar value of R&D expenditures.

5. Supporting Technical Evidence

Reviewers often request additional materials showing the technical work performed.

Examples include:

• Design documents

• System architecture diagrams

• Prototype schematics

• Simulation results

• Performance benchmark reports

• Code repositories

These materials help the reviewer understand how the experimentation was conducted.