SR&ED Time Tracking Requirements and Tools

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In this article, we outline the Canada Revenue Agency’s (CRA) requirements for SR&ED time tracking, share best practices for documenting time effectively, and conclude with a list of time tracking software tools we’ve found helpful in our practice.

Contemporaneous documentation “that is dated, signed, and specific to the work performed are the best supporting evidence that you can provide.“¹ It can be the reason your SR&ED claim is accepted, reviewed, or denied. Keeping up with the time spent on an SR&ED project can be difficult, especially when it is a project that spans multiple claim periods or that involves multiple team members; however, ensuring your time tracking records are sufficient may be the difference between your claim being rejected or accepted.

SR&ED Time Tracking Requirements

The CRA’s SR&ED Salary or Wages Policy does not set out specific requirements for how time tracking must be conducted. This point was reinforced by a CRA spokesperson via email, who confirmed to our team that “the CRA does not prescribe the manner in which time spent working on SR&ED activities should be recorded.”² Instead, the CRA provides “a list of potential sources of supporting information that could be used by claimants to support an allocation of labour expenditures to an SR&ED project.”³

According to the policy document, the objective of producing these sources of information is to provide key facts including:

The names of the employees performing the SR&ED work.
Confirmation of employment (hire and termination dates).
Verification that the individual is an employee and not a contractor.
Identification of specified employees.⁴

The document also explains that “appropriate allocation methodologies can be used to determine the number of hours an employee spent working in SR&ED.” However, appropriate and effective controls must be in place, and “in some cases, more than one source of supporting information may be required.”⁵

Time Tracking in SR&ED – Sources of Information

Time Sheets

The CRA recommends using time sheets. The SR&ED Salary or Wages Policy notes: “Individual time sheets that allocate time to SR&ED and non-SR&ED work are a good source of supporting information.” When using time sheets it is important to keep in mind that internal codes and language used may be based on business projects which do not align to SR&ED projects. In these cases, “other evidence may be required to support the SR&ED labour allocation.”⁶

Development plans

When using timesheets to support an SR&ED claim, additional documentation—such as a development or project schedule—can provide further validation. This type of documentation is particularly valuable because, as the CRA states, “The resource-planning element of a project schedule plan may identify the resources associated with specific work to be undertaken in the claim period. Where the work relates to the technological or scientific objectives of the SR&ED project and the plan can be compared to actual results or other controls, one may be able to rely on these planning records to allocate labour to an SR&ED project.”⁷

Supervisors’ Summaries

Another useful method for tracking time spent on SR&ED projects is through supervisors’ or project managers’ summaries. As outlined in the CRA’s SR&ED Salary or Wages Policy:

“Project managers or technical supervisors often prepare periodic weekly, monthly or quarterly summaries. The summaries document the amount of SR&ED undertaken by the R&D teams for a given period. A person who has direct involvement in managing the work of SR&ED personnel should prepare such summaries. It is expected that the summaries would identify the significant SR&ED and any non-SR&ED work undertaken during the period in question. To be effective, the summaries should be updated regularly.”⁸

Naturally Generated Information

There are other types of additional naturally generated information that may be used to substantiate the amount of SR&ED work on a project. These documents could include:

Contracts
Planning documents.
Project specifications.
Project objectives and milestones.
Descriptions of problems to be solved.
Resource allocation records and budgets.
Written correspondence with customers and suppliers.
Minutes of meetings.
Supervisor summaries.
Project, laboratory, or personal notebooks.
Progress and final project reports.
Organizational charts.⁹

The CRA stipulates that “an allocation of labour based on naturally generated information must give the CRA a reasonable level of assurance that there is minimal risk of material error in the labour expenditure being allocated to an SR&ED project. The claimant should be able to show support for the claim in the documents and other information.”¹⁰

The CRA confirmed via email that inadequate documentation is a recurring issue in SR&ED reviews: “One of the challenges the CRA often encounters when reviewing SR&ED time tracking is a lack of sufficient detail and documentation. It’s essential to clearly distinguish time spent on SR&ED activities from time spent on non-SR&ED work. Using dedicated time codes for both types of activities can significantly help address this issue.”¹¹

Time Tracking Software Applications for SR&ED

The CRA doesn’t mandate a specific method or software for time tracking but emphasizes the need for reliable, contemporaneous records. This is potentially a result of Treasury Board of Canada Secretariat rules prohibiting the federal government from endorsing third-party vendors on their own communications products.¹²

It is important to note that “The use of an allocation method in determining SR&ED labour expenditures will generally be acceptable to the CRA, as long as there is supporting information to establish the reasonableness of the method.”¹³

In our experience with CRA reviews, audits, and consultations, reviewers consistently emphasize the importance of activity-based time tracking. This approach creates a clear linkage between the hours recorded and the specific activities performed. To strengthen your claim, it’s also important to include descriptions of the activities undertaken, as this adds context and supports the relevance of the work to SR&ED.

There is a multitude of time tracking software applications available, one example our team has used with great success in the past is the Time Doctor software. The time tracking software applications listed below have also been used successfully for SR&ED projects:

(Note: The scroll function is at the bottom of the table.)

Software
	Harvest	Toggl	ClickTime	TimeDoctor	Everhour	TimeCamp	Clockify
Website	http://www.getharvest.com	https://www.toggl.com	http://www.clicktime.com	http://www.timedoctor.com	https://everhour.com	https://www.timecamp.com	https://clockify.me/
Access	- SaaS/Web-based - App for iPhone and Android	- SaaS/Web-based and downloadable - App for iPhone and Android - Browser Plugin extension	- SaaS/Web-based - Timesheet App for iPhone and Android	- SaaS/Web-based and downloadable - App for iPhone and Android	- SaaS/Web-based - App for iPhone - Browser Plugin extension	- SaaS/Web-based - App for iPhone and Android - Browser Plugin extension	- SaaS/Web-based - App for iPhone and Android - Browser Plugin extension
Reports	- Wide selection of visual reports - Budgets, Team capacity, Internal costs, Time spent on tasks	- Multiple levels of detail to view data from - Client-ready visuals - Export all reports (PDF, CSV, Excel, URL) - Schedule reports to email automatically	- Ability to create custom reports - Expense Reports, Project budgeting reports - Timesheet management reports for easy administrative purposes - Employee resource management, utilization and billable hours reports - Export to Excel and PDF	- Daily email productivity notifications outlining time spent on tasks, total time worked - Weekly report including time spent on emails, chat, websites visited and application categories used	- Ability to create custom reports - Reminders and notifications for timers and time tracking - Schedule reports to email automatically	- 10+ built-in reports - Ability to create custom reports - Export and share as PDF, Excel or via email - Invite guest to view project platform	- Ability to filter data to create custom reports - Breakdown and view data by day, activity , and user. - Export and share as PDF, Excel or via email
Tracking Configured for SR&ED work	No	Yes	No	No	No	No	No
Other Features	- Streamlined Invoicing - Online payments - Automatically copy invoices and payments to accounting software - Automatically reminds employees to submit time sheets - Flexible timekeeping and invoicing (by time or by project)	- Time audits and reminders - Billing and Invoicing - Flexible employee time tracking - Calendar integrations - Payroll - Team scheduling and management tools - Team dashboard	- Mobile notifications remind employees to submit time sheets - Totals billable hours and includes details on how time is spent - Track expenses by taking pictures of receipts within mobile app - Populates expenses on designated reports for reimbursement, invoicing, or cost-accounting once approved - Automatically track accrual of sick and vacation time - Request and approve time off through app	- Matches tasks with projects - Sends distraction alerts when high amounts of time on Youtube, Facebook, etc., are detected - Takes regular screenshots of the computer screen (when activated) - Software available on all devices - Activity Tracking - Offline time tracking - Payroll - 24 hour support	- Activity Tracking, timed or manual - Clock-in, clock-out tool - Time estimate tool, and auto-stop timer - Automatically track accrual of sick and vacation time - Email alerts for project budgets - Custom task rates - Automate data transfer with Zapier tool - Billing and Invoicing	- Productivity Tracking - Automatic time tracking - Billing and Invoicing - Rapid timesheet approvals - Attendance (in lieu of clocking in and out) - Self-hosted on company's server or private cloud	- Unlimited Tracking - Unlimited projects - Unlimited reports - Team chat - Unlimited Users - Self-hosted on company's server or private cloud - 24 hour support
Integration	- 56 Integrations available including Google Docs, Google Apps, Jira, Xero and more. - See details	- Over 100 integrations available including Google Docs, Google Apps, Jira, Xero and more. - See details	- Integration with certain CRM, accounting ,and payroll software applications. - See details	- 64 Integrations for project management, Collaboration, Development, Accounting & Invoicing, CRM, and Sales. - See details	- Over 100 Integrations for project management, Collaboration, Development, Accounting & Invoicing, CRM, and Sales. - See details	- Over 100 Integrations for project management, Collaboration, Development, Accounting & Invoicing, CRM, and Sales. - See details	- 40+ Integrations for project management, Collaboration, Development, Accounting & Invoicing, CRM, and Sales. - See details
Data Security	- Data encryption via SSL - PCI-DSS compliance - Physical and remote security - Server host is SOC 2 certified - Data protected by RAID arrays over multiple storage units - Data backup multiple times per day to minimum 2 physical data centers - See details	- Data encryption - GDPR-compliant - Storage in several separate physical locations - See details	- Data encryption - Data backup every 30 minutes to multiple machines - Encrypted snapshot of data moved off-site daily - Data center contains advanced entry security, fire protection, and extensive backup power generation. - Data protected by RAID arrays over multiple storage units - Load-balancing & Data Mirroring - Secondary facilities to restore access in the event that the primary datacenter is damage or unavailable. - See details	- Data encryption via SSL - 24/7 monitoring - Two-factor authentication (2fa) - Network and overall infrastructure security - Internal system logging - Daily data backup - Physical security - See details	- Data encryption via SSL/TLS - GDPR-compliant - Backups retained for 30-days - See details	- Data encryption via TSL - ISO 27001 certified - GDPR-compliant - Amazon Web Service security measures - Automated vulnerability scans every week, in-depth security assessments twice a year, regular spot checks - Use of Cloudflare in front of the application and our front-end assets to mitigate the risk of DDoS attacks - Regular data backup - See details	- Data encryption via SSL/TLS - ISO 27001 certified - GDPR-compliant - Amazon Web Service security measures - Storage in several separate physical locations - company-specific data inside Cloud Clockify is kept separate through a logical separation at the data tier, based on application-level access permissions and roles you set up in your workspaces - See details
Cost	- Subscription-based - Limited free version (Maximum 1 seat/ 2 projects) - Paid version $12/month USD (unlimited) - 30-day free trial period - See details	- Subscription-based - Limited free version (Maximum 5 teams) - Paid versions from $10/user/month - 30-day free trial period of Toggl Track Premium Plan - See details	- Subscription-based - Starting at $10/user/month - 14-day free trial period - See details	- Subscription-based - Paid versions from $7/month to $20/month - 14-day free trial period - See details	- Subscription-based -$8.50/user/month (USD) - 14-day free trial period - See details	- Subscription-based - Limited free version (max 1 integration) - Paid version from $7/user/month USD (unlimited) - 14-day free trial period - See details	- Subscription-based - Free version available - Paid version from $3.99/user/month USD (unlimited) - See details

There are a few SR&ED-specific software programs that can track time, however, these programs are not limited to time tracking only, but are comprehensive project management software applications and may not integrate easily with your company’s current processes. Be sure to research any software you consider and weigh the risks against the benefits of adopting a brand new process. Below are three examples of SR&ED-specific tracking software applications:

R&DBASE | Turn Research into Development (rdbase.net): This software system is designed for researchers to benchmark efforts against prior art and then file claims for patents, grants & research tax credits.
Sredio | SR&ED Automation and Management: The Sredio software generates prefilled SR&ED tracking reports weekly which are specifically tailored to the SR&ED filing requirements of the CRA.

However, the effectiveness of any software ultimately depends on the systems already in place. It’s important to first take inventory of the tools and processes currently in use, and then assess whether:

They can provide some degree of time tracking, if not;
What software might integrate seamlessly with them?

Keep in mind that introducing a new, siloed system generally doesn’t work – even with a good change management strategy. It is advisable to find a time tracking software that can be integrated into your current systems.

Key things to look for in the software systems considered include:

Regular reporting/reminders for team members and managers to track their time.
Integration with pre-existing systems, to avoid double entry
Dashboards for ease of reviewing data.
Ease of use, to minimize adoption issues

Unfortunately, it’s difficult to recommend a one-size-fits-all solution, as successful implementations vary widely—from robust time-tracking and reporting software to simple rollups in Google Sheets. What’s important is that the chosen method effectively addresses the key elements required by the CRA for SR&ED claims. While time tracking is essential, the best approach will ultimately depend on the specific needs, workflows, and resources of each organization.

As with most software implementations, the greatest challenge often lies not in selecting the right tool, but in rolling it out to the broader team and encouraging adoption of the new process. If someone on your team has training in change management, it would be wise to leverage their expertise—particularly when introducing new systems for time tracking and documentation, which are critical for both SR&ED and IRAP compliance. If no one in-house has this background, the Change Management Certification Program | Prosci is a well-regarded option that equips individuals with the knowledge, skills, and tools needed to lead successful change initiatives.

Conclusion

Contemporaneous documentation is essential to the success of any SR&ED claim. The quality and accuracy of your records can be the deciding factor in whether your claim is accepted, reviewed, or denied.

Time tracking is more than just a compliance task—it’s a critical part of demonstrating that your claimed expenditures are directly related to eligible SR&ED work. Whether you’re using a simple spreadsheet or a fully integrated tracking system, the key is to ensure your method is consistent, detailed, and aligned with CRA expectations.

There is no universal solution that fits every organization. The right approach depends on your team’s workflows, existing tools, and the complexity of your projects. Start by reviewing your current documentation processes. Identify gaps, and consider how your existing systems can be adapted or enhanced before adopting new software.

Above all, success often hinges not on the software itself, but on your team’s ability to implement and maintain it. If possible, engage someone with change management expertise to support adoption—particularly when compliance is at stake for programs like SR&ED or IRAP.

What has been successful for you in terms of time tracking for SR&ED projects?

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