SR&ED Documentation and Filing: A Step-by-Step Guide
From project identification to T661 filing — a step-by-step guide to SR&ED documentation for Canadian companies.
CRA does not require perfection — but it does require proof. SR&ED documentation is how you demonstrate that your R&D work involved real technological uncertainty, systematic investigation, and eligible expenditures. Here is a practical sequence for getting from scattered records to a filed T661.
Step 1: Identify SR&ED Projects
Split your R&D into distinct projects with clear names and date ranges. A single catch-all "product development" project is an audit red flag. Each project should represent a body of work aimed at resolving a specific technological uncertainty.
Step 2: Gather Contemporaneous Evidence
Pull Git commits, Jira tickets, design documents, lab notes, and meeting minutes from the tax year. Evidence created during the work is far stronger than narratives reconstructed at year-end. Link each artifact to a named project.
Step 3: Draft the Line 246 Narrative
T661 line 246 is where you explain technological uncertainty, hypotheses tested, work performed, and advancement sought. Write in technical language. Describe failed approaches — they demonstrate genuine experimentation.
Step 4: Reconcile Financial Schedules
Map payroll, materials, contracts, and overhead to projects. Ensure T661 totals match your general ledger. For contract payments, confirm 80% rule and arm's-length requirements are met.
Free Tools to Stay on Track
Use our T661 Checklist to track completion by section, the Eligibility Quiz to validate your project qualifies, and the R&D Calculator to estimate your credit before filing.