CRA Issues Updated Guidelines on SR&ED Software Project Audits

The CRA has published a revised application bulletin detailing the criteria used by provincial tax assessors to review Scientific Research and Experimental Development (SR&ED) claims for software projects. The agency is warning companies that routine application development using standard libraries is subject to high audit rates.

Defining Technological Uncertainty

To qualify for the tax credit, software projects must seek to resolve a technological uncertainty that cannot be resolved through standard public knowledge or routine developer practices. Examples of qualifying work include custom compiler design, database latency scaling under unproven architectures, or deep neural network model modifications.

Contemporaneous Logs are Mandatory

The CRA bulletin highlights that retroactively reconstructing hours in an Excel sheet is the primary cause of claim rejection. Claims must be backed by contemporaneous developer logs, git commits, project planning notes, and architecture diagrams linked directly to the claimed R&D uncertainty.