Filing an SR&ED claim isn’t just about proving your work qualifies—it’s about proving it happened in case of an audit. The #1 reason claims get delayed or rejected? Lack of proper documentation. Without clear records, the CRA may reduce or deny your refund. But businesses with organized documentation get faster approvals, fewer audit questions, and higher refund success rates. This guide breaks down what documents you need, how to track them, and which tools can help—so you can DIY your SR&ED claim with confidence and keep 100% of your tax credit.

1. What Documents Do You Need for SR&ED Audit? (Checklist)

The CRA needs clear evidence that your project qualifies under SR&ED criteria. That means keeping records of:

• Who worked on the project (subcontractors, team logs).
• What work was done (technical documentation, experiments, source code).
• How much was spent (invoices, receipts, payroll).

Below is a detailed checklist to ensure you have everything needed for a successful claim.

A. Payroll & Labour Documentation (Largest SR&ED Expense—Track It Well!)

Since salaries and wages are often the biggest claimable expense, it’s critical to have records proving who worked on SR&ED and for how long.

✅ T4 Slips & Pay Stubs → Proof that employees were paid for SR&ED-related work.
✅ Time-sheets & Work Logs → Show the percentage of time employees spent on R&D tasks.
✅ Job Descriptions & Employee Contracts → Define roles and direct involvement in SR&ED activities.

💡 Tip: Founders and shareholders who actively work on SR&ED should track and document their hours—this can increase your claim significantly.

B. Subcontractor & Third-Party Work (Keep Clear Records to Avoid CRA Scrutiny!)

Hiring Canadian subcontractors or universities for R&D? Their work may be eligible, but only 80% of the cost can be claimed.

✅ Invoices from Canadian Subcontractors → Must clearly state R&D activities performed.
✅ Statements of Work (SOWs) → Detail what tasks were done, by whom, and why.

💡 Tip: Payments to universities and research institutes often qualify for higher SR&ED credits—making them a great investment for maximizing your claim.

C. Overhead & Material Costs (Track What You Spend on R&D-Related Expenses)

Some costs related to materials and overhead expenses may be claimable.

✅ Receipts for R&D Purchases → Materials consumed in experiments (chemicals, electronics, prototype components).
✅ Lab & Equipment Usage Logs → Show how materials were used in SR&ED work.
✅ Rent, Utilities, and Indirect Costs → If using the traditional method instead of proxy (55% overhead method).

💡 Tip: The proxy method (55% of salaries added as overhead) is easier and often results in a higher claim. Most businesses should choose this unless they have high R&D-related rent or utilities.

D. Technical Documentation & Proof of R&D Work (Critical for Showing the “How” & “Why” of Your Project)

The CRA expects detailed records of your experiments, testing, and problem-solving efforts.

✅ Project Logs & Meeting Notes → Outline technical challenges, hypotheses, and discussions.
✅ Test Results & Experiment Data → Show evidence of research, iterations, and improvements.
✅ Version Control / Source Code Changes → For software claims, document code commits, debugging iterations, and AI model training logs.
✅ Prototypes & Product Iterations → Keep photos, videos, and test reports for physical R&D work.

💡 Tip: A failed experiment is still SR&ED-eligible! Keep all test results, even if your approach didn’t work—it still proves technological uncertainty.

2. How to Collect & Organize SR&ED Documents

A. Keep Records As You Go (Don’t Wait Until Tax Season!)

• Start tracking from day one → Don’t rely on memory months later.
• Set up a system for logging experiments, time, and purchases.

B. Use Cloud Storage & Backup Everything (Lost Receipts = Lost Refunds)

• Use Google Drive, Dropbox, Notion, or OneDrive to store files securely.
• Keep backups of receipts, invoices, contracts, and logs.

C. Label & Categorize Documents Clearly (Make Retrieval Easy)

• Example folder structure:
  • 📂 Payroll → T4s, Paystubs, Contracts
  • 📂 Subcontractors → Invoices, SOWs
  • 📂 Materials → Receipts, Equipment Logs
  • 📂 R&D Logs → Meeting Notes, Experiments, Code Changes

💡 Tip: Well-organized files save time and help you defend your claim in case of a CRA review.

3. Best Tools for Tracking SR&ED Documentation

Using the right tools simplifies record-keeping and ensures you don’t miss claimable expenses.

✅ JIRA / Trello → Track R&D tasks, progress, and technical challenges.
✅ Slack / Email Archives → Keep technical discussions & team communications.
✅ GitHub / Bitbucket → Document software development iterations.
✅ QuickBooks / Xero → Track SR&ED-eligible expenses, payroll, and invoices.

💡 Tip: Make documentation part of your daily workflow—instead of scrambling at year-end!

4. What Happens If You Don’t Keep Proper Documentation?

🚫 Lower claim approval rate → you may claim for less and simply cannot maximize.
🚫 Harder to defend your claim if audited → CRA may reduce or reject your refund.

💡 Rule of Thumb: Keep your records organized and audit-proof.

Final Thoughts: Documentation = Higher Refunds & Easier SR&ED Claims

• Start tracking from day one to avoid missing claimable expenses.

• Proper documentation makes filing easier and ensures you maximize your claim.

• Use cloud storage and tracking tools to keep your records organized.

Next Up:

👉 How to DIY your SR&ED claim we’ll walk you through the exact forms and process for submitting your SR&ED claim.