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Consider Metrics First when Drafting a Technical Narrative

Numbers and Metrics in SR&ED

It is critical to use metrics in your T661 technical narrative to support your claim. 

The most important component of an SR&ED claim is the technical narrative in the T661. The challenge is to condense the supporting documentation (of which there could be dozens and sometimes hundreds of pages) to 1400 words to comply with the word limits in the T661. Email correspondence, project reports, lab notebooks – all of these can be used to support the hours of systematic investigation conducted during the year for the project being claimed.

The T661 word limits can be stretched at times, especially if using tax software that counts text by line, and not by words or characters. It is important, however, to ensure that the essential information is included in your T661 technical narrative and what you write is supported by quantifiable metrics.

Establish Your Company’s Knowledge Base

The first people who will look at your technical narrative at the CRA have a broad level of knowledge (i.e. a Bachelors in a field of science). You cannot assume their knowledge of any industry-specific jargon or what is “known” in your industry. In short, you must establish your own company’s knowledge base before describing the technological advancement.

Context, Metrics and Supporting Details Are Key

Approximately 30% of the technical narrative (400 of 1400 words) should be dedicated to supporting details. Providing supporting details and context for the work performed is essential to support each component of the form: Line 246 (Advancements -350 words), Line 242 (Obstacles – 350 words) and Line 244 (Work Performed – 700 words). The completed technical narrative may not follow these word limits exactly, however, the metrics, context and other supporting details should provide the basis for the remainder of the technical narrative to grow.

Numbers Matter – Use Them

It might seem convoluted to require metrics and numbers in a technical narrative, considering the limited space available in the T661 to describe the work performed; however, metrics are critical particularly if they are quantifiable. When writing a technical narrative, ask yourself:

Can we quantify the improvements we achieved? Can we articulate the new knowledge / information generated?

If a particular aspect of experimentation made a significant impact, state what this impact was and quantify it if possible. Your audience is the CRA – an organization focused on numbers – and ensuring you communicate effectively will help your application. Further, evidence of a systematic approach is critical to show the work was performed in a logical, professional manner and that every hour was necessary to the project being claimed. By looking for quantifiable metrics, more questions and details may arise that will give you the information necessary to write a good technical narrative.

Do you have questions or ideas about the drafting process for technical narratives?

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