SR&ED Technical Narratives and Claim Preparation Tips

Six tips for writing great technical narratives to help maximize your SR&ED claim.

The technical narrative section of an SR&ED claim is the most important part. This shows the entire scope of your development and experimentation process. Technical narratives may take some time, however, crafting them well will make it easier for you to refine to the most important details, experimental analysis, uncertainties, and knowledge gained. When editing, ensure you stay away from the words that appear as red flags to the Canada Revenue Agency (CRA’s) Research and Technology Advisors (RTAs) and don’t mention product names.

Tips for writing an SR&ED Technical Narrative

1. Make the communication logical and concise.

The progression of ideas should flow smoothly between sections, allowing the reader to go through the document quickly without searching for any information.

2. Have expanded explanations prepared in advance.

Given the limited space for writing, it is wise to prepare an audit-ready document, binder or working papers that provide substantiating information.

3. Continuity between SR&ED projects.

For continuing projects, list in the same sequence as the year previously claimed. This allows the RTA to easily cross-reference materials. Again, the goal is to have them read as quickly as possible, thus reducing time spent on your file and the likelihood that reviewers will have further questions.

For discontinued projects, make it clear why projects from previous years with continuing timelines were not continued or claimed in the current SR&ED claim.

4. Keep it simple.

Not all projects need to be broken down individually. It is possible to combine projects, provided they deal with similar technology (but in different application areas).  Technological projects in companies are often multi-denominational and are used in different business projects; this is fully understood by the Canada Revenue Agency.

5. Keep timelines concise.

CRA mandates aim to cut off funding for anything they think might run over multiple years (“perpetual projects”). Be wary of R&D projects that are more than three years in duration. Companies should re-examine ongoing projects to see if there are new technological thrusts. If not, end the previous project, and appropriately name the next project if you identify new technological obstacles/uncertainties.

6. Use your word count wisely.

There are word limits in the technical narrative sections of the T661 form – they should be used wisely. Avoid describing support activities. The project descriptions are like lenses that are focused on different aspects of a project. It is not necessary to give all the support activities. Instead, focus on the key milestones and difficult activities/obstacles so you can include quantifiable measurements statistics, conclusions, and other evidence.

Conclusion

Remember to put appropriate time and effort into preparing these documents. Often, those who are involved personally in the SR&ED project are too close and some of these steps are missed or neglected. Having someone unfamiliar with the project to read through the technical narrative is always advised, as it will expose any gaps in clarification or information.

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