A CRA SR&ED review is the Canada Revenue Agency checking a claim you filed yourself, against the Income Tax Act, the facts and your records, either before it pays or after it has paid. It is not a tax audit. An audit usually asks whether your numbers are right. A CRA SR&ED review asks a prior question: whether the work you claimed falls inside the definition of research and development at all. A clean general ledger does not answer that question.
It tests both halves of what your SR&ED claim preparation asserted: that the work qualified, and that the dollars belonged to it. The review runs in two halves and several hard windows, and what you do inside those windows decides most of the outcome.
How a CRA SR&ED Review Differs From a Tax Audit
SR&ED is scientific research and experimental development, and how the SR&ED program works comes down to one idea: it pays a deduction and an investment tax credit for work carried out to resolve technical uncertainty. The machinery of a review will be familiar: an information request with a deadline, a meeting, a proposal letter, a response window, and a notice at the end. What is unfamiliar is the technical half.
What the Reviewers Are Checking
A review can focus on the work, to decide whether it is eligible, and on the expenditures, to decide whether they are allowable. It can also be confined to the expenditures alone.
The technical question is not an accounting question. Nobody approves an SR&ED claim in advance. You decide what work counts and what it cost, file Form T661, the SR&ED expenditures claim, with your T2 return, and in most cases get paid on the strength of your own narrative. A review is the verification step a self-assessed credit needs.
If the letter in your hand is about the corporate return rather than the claim, preparing for a CRA audit is the closer fit.
Why Your Claim Was Selected
All SR&ED claims undergo a risk assessment. Claims are then selected for review on the basis of that risk assessment, or for other reasons, such as random sampling. Because some selection is random, a review is not in itself a finding that anything is wrong with your claim.
What selection means is practical. The claim now has to be explained to somebody who did not write it, under deadlines, and that is a different task from filing it. Bottom line: selection is not an accusation, but it is a demand on your calendar.
The First-Time Claimant Advisory Service Is Not a Review
If the CRA has invited you to the First-Time Claimant Advisory Service, nothing on your claim is being decided. The service is mandatory for claimants who are selected for it, and it provides recommendations and guidance to support future claims. If it is your first SR&ED claim, or you have not filed one in the last three years, you may be selected for it. May be, not will be.
The service is not a review of your claim, and no determinations of work eligibility or expenditures are made in it. It runs as an online meeting in which CRA SR&ED program officers discuss your current projects and your SR&ED work, and give you an information session tailored to your business. Afterwards you receive a report with a summary, recommendations, guidance and advice on preparing future claims. It is available only after a claim has been submitted.
The Two Halves of a Review: Technical and Financial
Your claim asserts two different kinds of thing: that the work was research and development, and that the dollars were spent on it. One needs an engineer or a scientist to test, the other needs an auditor, so the CRA sends both. It also publishes the manuals its technical and financial reviewers work from, so the process is documented in public.
The Research and Technology Advisor and the Technical Half
A review is generally conducted by a research and technology advisor, who decides whether the work meets the eligibility requirements and who reports to a research and technology manager. Those are the current job titles, and what you will hear on the phone.
The advisor examines your technical documentation and other relevant information, evaluates whether the work claimed is eligible, asks for more information, and discusses eligibility concerns with you. At the end you get a report setting out the eligibility decision and the reasons for it, with an invitation to give feedback on it, and the advisor is to address the concerns you raise. So the technical finding is not handed down and closed.
The Financial Reviewer and the Expenditure Half
The expenditure half goes to a financial reviewer, who reviews the expenditures claimed and reports to a financial review manager. That reviewer explains the review process to you, including the options for resolving concerns. The reviewer also examines the financial documentation, reviews the expenditures and tax credits claimed, asks for more information, and discusses concerns about the expenditures and the credits. The letter summarizing the findings of both reviews comes from this reviewer, with a clear explanation of any proposed adjustments.
Part of the financial reviewer’s stated task is to gain an understanding of how the claim was put together. In practice, somebody will be asked where each figure came from: which employees, which weeks, which project.
The Two Reviewers Compare Notes
The financial reviewer is required to coordinate and communicate with the technical advisor throughout the review, and to tell the advisor about any significant outcome that may affect it. So an answer you give to one of them reaches the other. If your engineers describe a project one way and your cost allocation describes it another, the inconsistency surfaces on its own. Keep the technical story and the expenditure schedule telling the same story about the same work.
The split decides two practical things: who you put in the room, and which filing cabinet each question comes out of. Getting either wrong costs you a round of correspondence.
| What you are looking at | Technical review | Financial review |
| Who conducts it | A research and technology advisor, reporting to a research and technology manager | A financial reviewer, reporting to a financial review manager |
| The question it answers | Did the work meet the eligibility requirements, the “Why” and the “How” | Were the expenditures claimed allowable, and how was the claim put together |
| What they examine | Technical documentation and other relevant information, including the evidence you indicated at lines 270 to 282 of Form T661 | Financial documentation and source documents, such as financial statements, ledgers, journals, vouchers, receipts, contracts and electronic records |
| Who should speak for you | The people who performed or supervised the work | Whoever keeps the books and whoever built the claim |
| What you receive | An SR&ED Project Eligibility Report setting out the eligibility decision and the reasons for it, with an invitation to give feedback on it | A letter summarizing the findings of both reviews, with a clear explanation of any proposed adjustments |
The Words the CRA Uses for Eligibility Now
The statutory test has not moved. The words used for it have. A claimant coached on the old language will not hear it from the reviewer, and can spend a meeting answering questions nobody asked.
What the Reviewer Means by the Why and the How
Current CRA guidance frames eligibility as two requirements, and reviewers work from them. The “How” requirement asks whether the work was a systematic investigation or search carried out in a field of science or technology by means of experiment or analysis. The “Why” requirement asks whether it was conducted for the advancement of scientific knowledge or for the purpose of achieving technological advancement.
The definition of SR&ED itself sits in the Income Tax Act, and it did not change when the guidance language did. The two requirements, published in summer 2021, replaced the five questions used before, and both come from that same definition. The five questions came out of a 1998 Tax Court of Canada decision in Northwest Hydraulic Consultants Limited v. The Queen, and the policy built on them was archived. So an adviser who still coaches the five questions is not wrong about the substance. Those are simply not the words in the guidance now.
What Counts as Scientific or Technological Uncertainty
The test for scientific or technological uncertainty is narrow: it is unknown or uncertain whether a given result or objective can be achieved, because of an insufficiency in the available scientific or technological knowledge.
Here’s the catch. The question is not whether the project was hard, or new to your company, or commercially risky. It is whether the knowledge needed to know the answer in advance was simply not available. Test it this way: before you started, could a competent professional in your field have told you whether the approach would work? If so, the gap was in your knowledge, not in the field’s.
How the Review Unfolds, Stage by Stage
The sequence is published in three steps: the start of the review, the review meeting, and the end of the review. Named stages sit inside them: the first contact, preparing for the meeting, interviews, a tour of your premises, the preliminary findings, and the findings that close the file. That order is set out in the CRA’s own guide to the SR&ED review process.
First Contact: A Phone Call, Not a Letter
First contact is a phone call: one of the reviewers assigned to your claim rings you, and that call sets the agenda. Treating it as a formality is the most common early mistake. Three things are worth doing on it:
- Find out which half of the claim is in question, and who the other reviewer is.
- Ask for an expected timeline and get the answer in writing, because the CRA’s published service standards cover claims it accepts as filed and refundable claims it selects for review, and a non-refundable claim under review is not among those standards.
- Authorize your representative now, before the information request arrives, so your accountant can deal with the reviewer from the start.
The Initial Letter, and When It Sets a Deadline
An initial letter follows the call. It summarizes what was discussed, lists any information being requested, and says whether each item is needed before the meeting or at it. If information is required before the meeting, the letter gives you a deadline, set following the standard timelines for information requests, which is generally 30 days. The deadline you work to is the one the letter states, so read it off the letter rather than assuming a month from the day it arrived.
Preparing for the Review Meeting: Who Should Be in the Room
Before the meeting you are asked to decide who from your company will take part, to explain the work and the expenditures. The CRA identifies the people directly involved in the work, meaning those who performed or supervised it. Your task at the meeting is to present the work and provide information that supports it. Sending only the accountant, or only the person who wrote the narrative, signals that nobody in the room can speak to the uncertainty. The reviewer wants to hear from the people who hit the wall and had to work out how to get past it, including the attempts that failed.
The Meeting, the Interviews, and the Tour of Your Premises
The meeting runs through an overview, interviews with your people, a tour of your premises and a review of your supporting information. The tour can be done virtually, and the CRA names the ways. You can record or photograph a product or process, present slides or other documents by screen sharing, or demonstrate a product live. You can also use a camera-equipped laptop or mobile device to take the participants on a tour. A claimant with nothing physical to show is not at a disadvantage.
Preliminary Findings at the Close of the Meeting
Preliminary review findings are shared when the meeting concludes. That is the CRA’s own term, and nothing has been proposed yet. So this is the cheapest moment in the process to fix a misunderstanding. If the advisor has a project wrong, or missed a document, say so before the meeting ends. There is also a stage for additional requests for information to support a claim, which is where the second and third rounds of questions arrive.
The Proposal Package and Your Response Window
If adjustments are being proposed, you receive a proposal package. It includes an SR&ED Project Eligibility Report. There is a proposal letter summarizing any proposed adjustments to the claimed expenditures and the investment tax credit, and if applicable a proposal of a penalty. And there are additional details of the proposed adjustments and the associated financial and tax implications, if applicable.
Then the window. You have generally 30 days from the date of the proposal letter to respond. The trigger is the date on the letter rather than the date you opened it, so a package left unopened for a week has already spent a week of it.
Answering in writing has a name. You have the right to explain your position in writing and to provide additional information or clarifications, and that is called making written representations. Use it.
How the Review Ends: The Letter and the Notice
There are two ways a review ends. If no adjustments are being proposed, you receive an SR&ED Project Eligibility Report and a final letter, followed by a notice of assessment or reassessment. If you made written representations, you are sent a notice of assessment or reassessment based on the modified review findings.
Either way the review closes with a notice. Where it reassesses the year, what a CRA reassessment means for your business reaches further than the claim itself. You have 90 days from the date of that notice to file an objection.
What the CRA Will Ask You to Produce
The records question splits the same way the review does. Two piles, not one. The technical pile surprises people, because it is made of things nobody ever filed: notebooks, commit logs, test data and failed builds.
The Technical Evidence: Start With the Boxes You Ticked on Form T661
The reviewers will ask to see the information you indicated having on lines 270 to 282 of Form T661 to support your claim. So the technical half starts from the boxes you ticked at filing.
The form carries a tick-box list of the kinds of records that support a claim. You tick everything that applies, and if you have supporting items that are not on the list, you tick line 281 and describe them on line 282 in 15 words or fewer. The CRA tells you not to submit the documents with the claim. So you tick at filing and produce at review, and a box ticked with nothing behind it becomes a question later.
Evidence Created While the Work Was Happening, and How Long to Keep It
Documents generated when the work was being carried out are the most common form of supporting evidence. It can also include photographs, videos, scrap and other artifacts that relate to the work, and software revision and commit logs.
That is the whole test: the evidence has to have been generated while the work was happening. Documents created after the reviewer calls carry very little weight, and everyone in the field knows it. A systematic investigation is described as generating a hypothesis, testing it and keeping evidence as the work progresses, so records are part of the method rather than paperwork about it. The Income Tax Act requires you to keep records and books in a form that allows the tax payable to be determined.
Records are generally kept for six years from the end of the last tax year they relate to. If you have filed an objection or an appeal, keep them until the latest of three dates: the objection or appeal is resolved, the time for any further appeal has passed, and the six-year period ends.
The Financial Records, and What the Reviewer Is Testing Them For
Records and documents the reviewers might ask for include financial statements, ledgers, journals and vouchers, and electronic records, along with source documents such as receipts, contracts and general correspondence. You provide those source documents as requested, for both the SR&ED work and the expenditures claimed. The financial reviewer’s task includes gaining an understanding of how the claim was put together, and that is where reviews slow down. If an outside adviser built the claim and nobody inside the company can explain how a salary figure was apportioned to a project, the allocation looks less reliable than it is.
The reviewer is deciding which dollars belong to the eligible work, not what the credit pays on them. If you elected the traditional method your overhead allocation is on the table and the reviewer will test it; under the proxy method it is not. And contracts with a related company get the hardest look, because a non-arm’s length contract is treated differently from an arm’s length one.
The Narrative the Reviewer Reads Back to You
The technical review reads your own project description back to you. Form T661 asks three questions, each with a word limit. Line 242, up to 350 words: what scientific or technological uncertainties did you attempt to overcome? Line 244, up to 700 words: what work did you perform in the tax year to overcome the uncertainties described at line 242? Line 246, up to 350 words: what scientific or technological advancements did you achieve or attempt to achieve as a result of the work described at line 244?
Those answers get tested against what the people in the room say and what the records show. Three accounts, one story. The narrative that holds up reads as a question the team could not answer from existing knowledge, what they tried, and what they learned, including from the attempts that failed. The one that struggles reads as a successful product launch.
Deadlines, Extensions, and Missed Windows
The review has several deadlines. Some have give in them, and one has none at all.
How Much Extra Time You Can Ask For
The CRA publishes standard timelines for information requests, and each request type has its own. Among the published types, a preliminary request for books and records carries up to 30 days initially, and up to a further 60 days if the CRA follows up, up to 90 days in total. A response to a proposal letter carries 30 days initially, and up to a further 30 days, up to 60 days in total.
The published list is not a menu you choose from. More time should be granted for factors or events outside the taxpayer’s control, such as illness, death and natural disaster, and it may include a change in representative. Being busy is not on that list. What works is asking early, in writing, with a specific date and a reason.
The Follow-Up Request Carries a Warning
A follow-up request carries a warning: the CRA can go to court to compel the records. There are no further additional days beyond the follow-up request. So there is no third chance: the request for more time has to be the first one.
Silence Does Not Pause the Review
If the requested information is not provided by the deadline, the review continues based on the information already received.
That is the most misunderstood point in the process. Not answering is not a delay. It is a decision to be assessed on an incomplete record.
Three consequences follow. Where you cannot or will not provide the information requested, the reviewers may ask for information from another person or business connected to your work, such as a client, a contractor or another third party. A lack of supporting information could result in the partial or full disallowance of the claim. And subsection 163(2) of the Income Tax Act sets out the legal consequences of not providing information and of providing information that is not correct.
How Long It Takes, and What It Costs You
There are published targets, and then there is what a review takes out of the business. Both are worth knowing before the first meeting, because only one of them ever appears in a budget.
The Published Targets, and What They Promise
Two published standards cover SR&ED claims. The goal is to process a claim within 60 calendar days from the date the CRA receives a complete claim, where the claim is not selected for a review or an audit. For a refundable claim, the goal is 180 calendar days from the date the CRA receives a complete claim, where the claim is selected for a review. The target on each is 90 percent of the time, and both sit in the CRA’s published service standards.
In the 2025-2026 fiscal year, 95 percent of claims not selected for review were processed within their standard, and in the 2025-2026 fiscal year, 93 percent of refundable claims selected for review were processed within theirs. Here’s the catch. The CRA has committed to achieving these standards 90 percent of the time, and performance is measured as the percentage of claims processed within the standard. A service standard is an aggregate aim, not a date your claim is entitled to.
The CRA’s published service standards cover claims it accepts as filed and refundable claims it selects for review. A non-refundable claim under review is not in them, so ask the reviewer for an expected timeline on the first call and get the answer in writing.
What Slows a Review Down
The named causes of delay are incomplete filings, missing tax returns, poor communication, scheduling difficulties, and prior-year audits affecting the current claim. That last one catches people out: an open audit of an earlier year can hold up this year’s claim.
Three of those five sit inside your business. File complete, keep your other returns current, and answer the correspondence. Where a claim was accepted as filed, you are notified on your notice of assessment or reassessment, and the CRA advises contacting it after 60 days if you have not heard back.
What the Review Costs You, Even If the Claim Holds
The cash is not the largest cost. Senior technical people come off billable or product work to prepare for the meeting and to sit in it, and that is the cost nobody budgets. Then there is management time spent assembling records that should already have existed, which produces nothing except a defence of something you already filed.
And there is the cash timing. A refundable claim selected for a review sits in the 180 calendar day standard from the date the CRA receives a complete claim, rather than the 60 calendar day standard that applies where a complete claim is not selected for a review or an audit, so the money lands months later than planned. The cheap version of claim preparation is paid for later, at review, in the most expensive hours the company has.
After the Reporting Deadline, a Claim Can Only Shrink
A review that lands after your reporting deadline is a one-way door.
A corporation has up to 18 months after the end of the tax year in which an SR&ED expenditure was incurred to include that expenditure, with the prescribed information, on Form T661. Once that reporting deadline has passed, no additional projects or expenditures will be considered or allowed, and you cannot include additional or substitute expenditures to make up for amounts the CRA has disallowed. The CRA cannot extend the deadline even where its own review ran past it. If the reporting deadline has passed, the CRA will not accept any additional information, and the SR&ED expenditures and the related investment tax credit will be lost.
Extensions exist for information requests, on stated grounds. There is no extension of the reporting deadline, on any grounds. Two different deadlines, two different answers. So the timing of a review against that deadline changes what is at stake, and a claim worth defending is worth documenting before anyone asks.
What Happens to Your Ontario Credits
Ontario’s two research credits ride on the federal finding. To qualify for the Ontario innovation tax credit you must be eligible to claim a federal investment tax credit under section 127 of the Income Tax Act, and it is claimed on Schedule 566. For the Ontario research and development tax credit, eligible expenditures are those that are qualified expenditures for the purposes of section 127 of the federal Act, for SR&ED carried on in Ontario, and it is claimed on Schedule 508. The CRA administers both. What either credit is worth depends on the federal and Ontario SR&ED credit rates, which a review does not change.
Both credits are computed on expenditures that qualify federally, and both are filed with the same T2. So when a review cuts the federal claim, the Ontario credits come down with it, and the cost of a reduced claim is the federal credit plus the Ontario credit that sat on top of it. The Ontario base follows the federal finding, so there is no separate Ontario argument to make. The practical check: compare the Schedule 566 and Schedule 508 figures on the reassessed T2 against the federal adjustment on the notice.
If You Disagree With the Findings
There are two routes out of a finding you disagree with, and they run on different clocks. One runs inside the SR&ED program, and the other is the formal objection, which goes to a different part of the CRA. The internal route is set out in the CRA’s guidelines for resolving SR&ED concerns.
Order matters, because the internal route closes when the reviewers close the file, while the formal route only opens once the notice arrives. Many owners hand the file over at this point, and dealing with the CRA on your behalf is a service precisely because these deadlines do not wait for a learning curve.
Start Inside the Review: Written Representations
Start inside the review. If you disagree with the review findings, you have the right to explain your position in writing and to provide additional information or clarifications, and that is called making written representations. The window is generally 30 days from the date of the proposal letter.
This is the cheapest and fastest route, and the only one where the people who made the finding can simply change it. Written representations that attach the document the reviewer said was missing often end the disagreement there, so spend those 30 days on evidence rather than argument.
The Three Internal Steps
The internal route has three steps, in this order. First, talk to the research and technology advisor and/or the financial reviewer. Second, contact the research and technology manager and/or the financial review manager. Third, request an administrative review.
Each rung is a different conversation. The first is about the facts. The second is about whether the reviewer applied the policy the way the program intends. The third is about process.
What an Administrative Review Does, and What It Will Not Do
An administrative review checks the review, not the claim. Its purpose is to determine whether the technical and financial reviews were consistent with current SR&ED legislation and policies, and whether you were given due process. It is not a second technical review by different reviewers. A claimant expecting a fresh look at eligibility is waiting for a remedy that is not coming.
You should tell the reviewers you intend to request an administrative review before the 30-day proposal period expires, and the request must be submitted before the reviewers close the file in order to be accepted. It is then forwarded to the local SR&ED Assistant Director within three business days. The form is RC532, Request for Administrative Review.
The 90-day objection deadline runs from the date of your notice, whatever else is in progress, so file the objection to protect it and pursue the administrative review alongside.
The Notice of Objection: 90 Days From the Date of the Notice
You have 90 days from the date of the notice of assessment, or reassessment, to file the objection. The Income Tax Act expresses the same deadline for a corporation as 90 days after the day of sending of the notice of assessment, under subsection 165(1). For an incorporated claimant the instruction is the same either way: 90 days, counted from the notice.
An objection is not a letter of complaint. It sets out what is actually in dispute: the facts you say were misinterpreted, the law you say was misapplied, and the change you are asking for. An incorporated claimant files it through My Business Account, where the service is called File a formal dispute (Notice of Objection), or on the CRA’s notice of objection form, RC592. An appeals officer then contacts the corporation or its authorized representative to discuss the differences and to try to resolve the dispute. File on time even if your file is not yet complete, because the deadline is the one thing you cannot repair afterwards.
Who Looks at Your Objection, and Where the Ladder Ends
An objection goes to the CRA’s Appeals Branch, whose mandate is to deliver impartial recourse services and which conducts a fair, complete and impartial review. It is not the same conversation you have already had with the reviewer. If the 90 days has already gone, you can apply for an extension. Apply as soon as possible, and no later than one year after the date you had to file the objection.
The ladder ends at the Tax Court of Canada, where two separate 90-day periods do two different jobs. The first is a waiting period: you may appeal if the CRA has not given you a decision within 90 days of the day you filed your objection. The second is a deadline: the Court has to receive your notice of appeal within 90 days of the date the CRA sends its decision on your objection, whether that decision is a notice of reassessment or a notice of confirmation. Subsection 169(1) of the Income Tax Act sets out both. One tells you when you may go. The other tells you when you must.
Pre-Claim Approval, New Since April 2026
Pre-claim approval launched on April 1, 2026. It is described as a new optional process that helps eligible small and medium businesses find out whether their projects qualify for SR&ED tax incentives before they start work or incur any costs. The eligibility conditions are set out on the CRA’s pre-claim approval page.
What it changes about a review is the clock. Where the projects had pre-claim approval and the claim matches the approved projects, a refundable claim selected for an expenditure review is processed within 90 days instead of the 180-day standard. The deeper change is when the thinking happens, because the evidence a review asks for has to exist while the work is going on.
Handling a Review That Is Already Running
A review is a deadline-driven file more than a technical argument. The response windows are where most of the damage is done or avoided. The work that wins them is unglamorous: getting the right people in the room, producing records that already existed, and keeping the technical story and the expenditure schedule telling the same story.
That is the work our team does. Stratos Consultants has filed more than 2,500 SR&ED projects across more than 15 years, and we handle SR&ED claims on contingency, so you pay only if the claim is successful. If you would rather not learn this process on your own file, our SR&ED consultants can take the correspondence and the meeting preparation off your desk.
If a reviewer has already called, book a consultation and bring the letter with you.
Frequently Asked Questions
No. All SR&ED claims undergo a risk assessment, and claims are selected for review based on that risk assessment or for other reasons, such as random sampling. So selection on its own is not a finding against you.
Walk the reviewer through the system itself: the architecture, the test harness, the branches that failed, and the record of what was tried and when. A virtual tour is accepted, so a company with nothing physical to demonstrate is not at a disadvantage. Show the work rather than the product.
Say so, and work with what exists. The Income Tax Act requires records good enough to let the tax payable be determined, and the CRA’s own evidence examples are documents generated while the work was being carried out. A lack of supporting information could result in the partial or full disallowance of the claim. So gather the material that was created at the time, including commit logs, test data and time records, and let the people who did the work explain the rest.
Often, yes. More time should be granted for factors or events outside your control, such as illness, death or a natural disaster, and it may include a change in representative. Being busy does not qualify, so ask early, in writing, with a specific date and a reason. One deadline is different: the SR&ED reporting deadline itself cannot be extended at all.
No. The objection is the formal route, and it goes to the CRA’s Appeals Branch. An administrative review stays inside the SR&ED program, checks how the review was conducted rather than the eligibility finding, and has to be requested before the reviewers close the file. The 90-day objection deadline runs from the date of your notice, whatever else is in progress, so file the objection to protect it and pursue the administrative review alongside.
Yes. A review can come before the money goes out or after it. Where a claim has already been paid and the amount is later adjusted, the adjustment arrives as a reassessment of the return, carried by the notice of assessment or reassessment that ends the review. That is why the records behind a paid claim still matter.
Yes. Both Ontario research credits are built on expenditures that qualify federally, so a federal reduction carries through to them. The Ontario base follows the federal finding, which means there is no separate Ontario argument to make, and the real cost of a reduced claim is both credits together.