Common SR&ED Claim Mistakes to Avoid

SR&ED can be one of the most valuable funding levers for innovative businesses, but it’s also one of the easiest to get wrong if your claim is rushed, thin, or poorly documented. Many rejections and reductions don’t happen because a company “didn’t do R&D,” but because the work wasn’t described the way the program expects, or the costs weren’t supported properly. If you want to improve approval confidence and reduce back-and-forth, start by treating your SR&ED file like an audit-ready project and not a last-minute form. That mindset alone helps you protect your sr&ed tax credits canada outcome and avoids painful surprises later.

1) Describing “development work” instead of “technical uncertainty”

A common mistake is writing a story about features shipped, deadlines met, and product milestones. SR&ED reviewers look for technical uncertainty, systematic investigation, and evidence that you tried to overcome a challenge that wasn’t straightforward.

What to do instead:

• Clearly state the technical problem and why routine engineering couldn’t solve it
• Describe hypotheses you tested (not just tasks you completed)
• Show iterations, failures, learnings, and measurable outcomes

If your narrative reads like a product update, the claim may be reduced even if your team truly did experimental work, especially when you’re aiming for refundable tax credits and the file needs to stand up under review.

2) Weak or missing supporting documentation

Many claims rely on memory-based summaries written months later. That creates gaps reviewers can’t verify. Your goal is to build a simple evidence trail while the work happens.

Examples of strong support:

• Time logs tied to SR&ED projects (not just generic timesheets)
• Version control history (commits linked to experiments)
• Test results, performance benchmarks, lab notes
• Meeting notes showing decisions, constraints, and outcomes

Even light documentation collected consistently can protect your r&d tax credit claim far more than a long narrative written at the end.

3) Mixing commercial work with experimental work

SR&ED is not a reward for building a product; it’s support for resolving technical uncertainties through experimentation. When you claim a large chunk of routine development, UI development, bug fixes or customer-specific implementations and you have not separated the experimental part, you are likely to face reductions.

Avoid this by:

• Splitting projects into “SR&ED-eligible” vs “non-eligible” activities
• Estimating time only for experimental work (with a clear rationale)
• Using a simple activity map (problem → experiment → result)

This clean separation improves clarity and strengthens sr&ed tax credits canada eligibility.

4) Overstating the novelty or making absolute claims

Others are not workable since they read as advertising: first of its kind, revolutionary, never done before. SR&ED does not demand global innovativeness and hyperbolism can destroy credibility.

Better approach:

• Explain what was uncertain for your team, given constraints
• Mention known approaches and why they didn’t work for your case
• Focus on evidence: tests run, trade-offs evaluated, results observed

Easy to understand factual language will assist the reviewers to evaluate refundable tax credits without the urge to push back on unsubstantiated statements.

5) Poor costing and unclear expense logic

Costing mistakes can also be caused by complex technical work. Among the most typical forms of problems are improperly distributed salaries, lack of support for subcontractors or alleging expenses unrelated to SR&ED work.

Reduce risk by:

• Mapping costs to SR&ED projects and time percentages, respectively.
• Storing invoices/contracts of contractors and associating them with tasks.
• Having a consistent procedure in calculating overheads (or proxy, where it is used)

A clean costing file makes your r&d tax credit claim faster to review and easier to defend.

6) Waiting until tax season to “reconstruct” the claim

Timing is a silent killer. Rebuilding all that at the end of the year makes context, evidence, and technical detail disappear, particularly when staff are rotated or projects are developed.

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A simple operating rhythm works best:

• Monthly: capture experiments, results, and blockers (short notes)
• Quarterly: confirm project boundaries and update time allocation
• Year-end: compile and finalize narratives with real evidence in hand

This approach improves consistency and supports long-term success with sr&ed tax credits canada.

Conclusion 

Avoiding these mistakes isn’t about writing longer claims; it’s about writing clearer ones, backed by evidence and clean costing. If you want help assessing eligibility, tightening narratives, and building audit-ready documentation for stronger refundable tax credits, book a consultation with GovMoney today and get expert guidance on preparing a confident SR&ED submission.

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