Recommended Supporting Evidence
While not strictly required by CRA, maintaining comprehensive documentation is essential for substantiating your SR&ED, especially in the event of an audit. The CRA recommends contemporaneous records that clearly demonstrate what work was done, who was involved, when it was performed, and how costs were calculated.
Time Sheets
Detailed time sheets mapping hours to specific SR&ED activities and projects.
Employment Contracts
Contracts outlining R&D responsibilities and job descriptions for claimed employees.
Payroll Summaries
T4 slips, RL-1 for Quebec employees, and annual payroll summaries.
Allocation Methodology
Documentation of how time is allocated for staff working on mixed SR&ED and non-SR&ED activities.
Supervisor Sign-offs
Manager or supervisor approvals validating time entries and SR&ED activities.
Project Codes
Project codes from HR, timekeeping, or project-management tools linking work to SR&ED projects.
Fringe Benefit Calculations
Detailed calculations for CPP, EI, vacation pay, and other employer contributions.
Digital Timesheets Accepted
Digitally signed timesheets are acceptable—ensure your process is audit-ready and timestamps are immutable.
Pro Tips for Payroll Documentation
Best Practices
- Track time contemporaneously: Record hours as work happens, not retroactively.
- Be specific: Link time entries to specific SR&ED projects and activities.
- Maintain consistency: Use the same methodology throughout the claim period.
- Keep originals: Retain original documents for at least 6 years after filing.
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