SR&ED Documentation Infrastructure That Survived a CRA Audit

The gap

The company had qualifying R&D activity and was claiming the credits. The problem was infrastructure: hour tracking was informal, project accounting wasn’t structured around SR&ED eligibility categories, and there was no auditable end-to-end link between time records, financial records, and technical documentation. A CRA review would likely have resulted in disallowance — not because the work didn’t qualify, but because the paper trail wasn’t there.

Making it invisible

The solution wasn’t to add a compliance process on top of what people were already doing.

Parallel processes get abandoned.

The goal was to make the documentation staff generated during normal operations the same documentation that would satisfy a CRA auditor. No extra steps. No separate system. No reliance on people doing something they’d stop doing the moment things got busy.

A contemporaneous hour tracking tool was implemented at the project and activity level, with categories aligned directly to SR&ED eligibility definitions. This was integrated with an open-source accounting system on self-hosted infrastructure — giving the company full ownership of its records and eliminating per-seat cost and vendor dependency of commercial alternatives.

Reporting was configured to produce SR&ED expenditure summaries, time allocations, and supporting schedules directly from the system — the same system staff used daily. Any schedule a CRA auditor might request could be produced on demand, from data that had been captured in real time.

The audit

The CRA audited. The contemporaneous records met the documentation standard. The expenditure categorization was accepted. The company could produce any supporting schedule requested, on demand, from the system they were already running. No disallowance.