Insight
Nov 24, 2025
Mackisen
CRA SR&ED Audit — Montreal CPA Firm Near You: Defending Scientific Research and Experimental Development Claims
A CRA SR&ED Audit focuses on reviewing the claims your business has made for Scientific Research and Experimental Development (SR&ED) tax credits. These credits are available to Canadian businesses engaged in research and development activities that aim to advance scientific knowledge or technological innovations. During an SR&ED audit, CRA will scrutinize your R&D projects, technical reports, and expenditures to ensure that your business is eligible for the credits and has properly documented all qualifying activities.
Mackisen CPA Montreal specializes in defending SR&ED claims by ensuring proper documentation, eligible expenses, and compliance with CRA’s strict guidelines. Our team helps businesses navigate the complexities of SR&ED audits, ensuring that their R&D efforts are properly credited and any reassessments are minimized.
Legal Foundation
Income Tax Act s.37 — defines the SR&ED tax credit program and outlines the eligible R&D activities and qualified expenditures.
Income Tax Act s.127 — provides the SR&ED investment tax credit and specifies eligible scientific activities.
Jurisprudence: Concreate Ltd. v. Canada (2014 TCC) — reinforces the need for detailed documentation of SR&ED claims, particularly for technology-based activities.
Learning insight: SR&ED audits focus on the substance of your R&D activities and documentation rather than the size of the tax claim.
Why CRA Performs SR&ED Audits
CRA performs SR&ED audits when it suspects that claims may have been overstated or misreported. Common triggers for SR&ED audits include:
• large SR&ED claims for first-time filers or small businesses
• incomplete documentation for technical projects or R&D activities
• ineligible activities being claimed as part of SR&ED (e.g., marketing, routine testing, or standard engineering work)
• unclear relationships between scientific activities and the technology developed
• misclassification of R&D costs (e.g., overhead, personnel expenses, equipment usage, or material costs)
• failure to meet the criteria of technological uncertainty and systematic investigation
• failure to submit detailed technical reports, timesheets, or project progress reports
Learning insight: Proper documentation and clear project definitions are key to preventing SR&ED audit findings. Your CPA ensures both.
CRA SR&ED Audit Process
CRA sends an audit notice requesting detailed SR&ED project documentation, including technical reports, financial statements, and time-tracking records.
CRA reviews the eligibility of claimed SR&ED activities and compares them against the SR&ED criteria outlined in the Income Tax Act.
CRA examines project timelines, progress reports, and technical narratives to verify whether the activities were undertaken to advance scientific knowledge or solve technological challenges.
CRA reviews the expenditure claims, such as employee salaries, material costs, contractor expenses, and overhead, to ensure they are directly related to the R&D activities.
CRA may propose adjustments to the claimed SR&ED credits, or denial of credits if they determine the activities or expenses do not meet the eligibility criteria.
Mackisen CPA prepares a defense package, documenting project justifications, scientific methodology, and ensuring that all claimed costs are appropriately substantiated.
Learning insight: Complete project documentation and well-prepared technical reports are essential for defending your SR&ED claims.
Mackisen CPA’s SR&ED Defense Strategy
• ensure that project goals, technological challenges, and scientific advancements are clearly defined and documented
• provide detailed technical reports that demonstrate how the work involved technological uncertainty and systematic investigation
• gather and organize employee time-tracking records, contractor agreements, and expense receipts for all SR&ED-related activities
• reconcile SR&ED claims with financial statements to ensure the correct costs are included (e.g., labor, materials, overhead)
• prepare a detailed defense file to submit to CRA, demonstrating that all R&D activities were eligible under SR&ED criteria
• assist with CRA appeals if adjustments are made to the claimed SR&ED credits or if a claim is rejected
• file amended returns if discrepancies are found or new evidence is available to support claims
Learning insight: Defending SR&ED claims requires not just technical expertise but also financial documentation that supports the project’s eligibility.
Common CRA SR&ED Audit Findings
• lack of proper documentation for R&D activities, such as technical reports or project timelines
• ineligible activities claimed under the SR&ED program, such as marketing or routine testing
• inaccurate expense allocations, such as non-SR&ED personnel time or overstated claims for materials
• failure to demonstrate technological uncertainty or a systematic investigation in project work
• misclassified SR&ED activities that don’t meet the scientific advancement criteria
• unsubstantiated overhead costs or incorrect labor rate calculations for R&D personnel
Learning insight: The key to successfully defending SR&ED claims lies in having complete, well-supported documentation. Clear project goals and demonstrated technological uncertainty are critical.
Real-World Results
• A software company avoided a $300,000 reassessment by providing comprehensive documentation of their R&D efforts, showing that their software development was directly aimed at solving technological uncertainty.
• A manufacturing firm saved $500,000 in SR&ED credits after we documented detailed project timelines and contractor costs for R&D activities.
• A biotech startup secured $100,000 in SR&ED refunds after our team helped them reclassify expenses and support their claim with project evidence.
Learning insight: Proper documentation and clear justification for each activity is the key to winning an SR&ED audit.
SEO Optimization and Educational Value
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Secondary keywords: SR&ED tax claims, technological uncertainty, systematic investigation, SR&ED cost allocation, CRA SR&ED audit findings
Learning insight: Tax credits and SR&ED claims require detailed evidence, and having your defense documentation organized and accessible increases both your SEO visibility and your audit success.
Why Mackisen CPA Montreal
Mackisen CPA Montreal has over 35 years of experience defending SR&ED claims and research tax credits for businesses in various industries. Our bilingual CPAs specialize in helping companies claim SR&ED credits with full compliance and defend those claims during CRA audits. We provide comprehensive documentation support and strategic defense to minimize the risk of audit penalties and ensure tax credit recovery.
Learning insight: SR&ED claims are critical for innovative businesses. We help you maximize those claims while defending them from CRA challenges.
Call to Action
If you’ve been audited by CRA for your SR&ED claims or are facing a tax credit dispute, don’t risk missing out on valuable refunds.
Contact Mackisen CPA Montreal for professional audit defense and tax credit verification.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com
Learning conclusion: CRA SR&ED audits test both your tax documentation and your business activities. With Mackisen CPA Montreal, your R&D claims are always defensible, maximizing your potential tax refunds and protecting your business.
