Get the Facts Straight: Keeping Sources and an Audit Trail

Are you keeping a proper audit trail?
Are you keeping a proper audit trail?

When performing R&D that you’d like to claim as SR&ED, keeping thorough, contemporaneous documentation (or an audit trail) is of the utmost importance. Keeping contemporaneous documentation involves identifying sources of information and keeping this information so it can be referred to at a later date. This historical record of the work performed is crucial to successfully claim SR&ED.

Keep Track of Your Information

The SR&ED program emphasizes scientific method and advancements made in the company at corporate levels, in the country the work is taking place, and also on a broader, more global scale. In order to prove that your company has performed the work being claimed for in SR&ED, contemporaneous documentation must be kept and referred to in the T661 technical narrative.

Audit trails are useful for maintaining security and for recovering lost transactions. Maintaining contemporaneous documentation is also helpful as a backup for supporting SR&ED tax claims as it keeps track of information and progress from the inception of the project, including setbacks.

The SR&ED Starting Point

The starting point for a research-oriented audit trail is establishing your company’s technological baseline. This is defined as the knowledge of the technological resources within the company and sources available publicly, from the inception of the project.

Keeping proof of what science was available and why you needed to improve upon it becomes the starting point of your SR&ED claim, as this is the technological uncertainty.

Conclusion: Keep Track of Your Sources and Contemporaneous Documentation

If your SR&ED claim is reviewed (or audited) after it has been filed, having excellent, contemporaneous documentation and evidence of all sources can save a lot of time (and potentially save your claim from being filed as ineligible).

Do you have an excellent process for keeping contemporaneous documentation whilst performing SR&ED work?

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