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What is the Best Way to Keep Documentation?

  • Documentation is required in case of an audit, in which case having adequate documentation is crucial to the success of an audit.
  • CRA expects “contemporaneous documentation”, meaning it is produced at the time the SR&ED took place, not a week before the audit. Therefore you should produce and collect documentation as you go. Daily is perfect, weekly is acceptable, monthly is pushing it and hard to maintain (but far better than nothing!).
  • You can keep documentation in any way that suits your employees and your business process. If you have meetings, please at least date and photograph the white board. Use email to summarize key points as they come up, rather than simply discussing them, executing them and forgetting them. A hand-written, dated, bound notebook can’t be beat; electronic notes are just fine as well. Physical artifacts, if you have them, are great. Remember to affix a date to them, and a written description wouldn’t hurt. Time sheets are much appreciated by CRA, failing that, some sort of documentation to show timeline and level of effort is most helpful; copious emails, meetings in your agenda and dated blue prints, are examples of proxies for time sheets.
  • As people are busy, don’t aim for perfect documentation, this is unrealistic for most individuals and typical businesses. Instead, choose a few approaches that are solid and support your business goals and stick to them, week in and week out. Five minutes a week per involved staff can go a long way at audit time and is also very helpful when reviewing your SR&ED activities for the year in advance of writing up the reports and costing the claim.