# CRA Workshop: Common Issues in SR&ED Software Claims

Published: 2018-10-29  
Author: ENTAX  
URL: https://entax.ca/blog/cra-workshop-common-issues-in-sred-software-claims

> Key takeaways from a CRA workshop on SR&ED eligibility for software and ICT companies — what the agency told us directly.

ENTAX attended a Canada Revenue Agency (CRA) SR&ED technical workshop in September 2018 focused on the Information and Communications Technology (ICT) sector. The session provided critical guidance on SR&ED eligibility for software companies.

## Key Statistics

In 2017, approximately $2.7 billion in Investment Tax Credits (ITCs) were distributed across Canada. Within the Pacific Region, 56% of ITCs went to the ICT sector, demonstrating the significant role of technology companies in Canada's SR&ED program.

## Common Misconceptions

The CRA identified a troubling trend: many ICT companies conflate routine product development and business innovation with eligible SR&ED work. Companies frequently mistake new business models, custom development, or general "innovation" as qualifying activities.

## Critical Takeaways

**Business Goals Don't Equal SR&ED Intent**

"Business goals (e.g. better user retention, platform monetization) do not demonstrate or communicate a SR&ED intent," the CRA clarified. However, technological objectives may be extractable from business goals if their technical implications are articulated clearly.

**Technology is Knowledge, Not Products**

SR&ED eligibility cannot be proven merely by delivering a finished product or service. Instead, it manifests through "the collection of skills, methods, and processes you invent or enhance" during development.

**All Five Eligibility Questions Must Be Answered Affirmatively**

The CRA's standardized five-question methodology is mandatory for all evaluations. Not all systematic work qualifies as SR&ED.

**Establishing the Technological Knowledge Base is Critical**

Companies must clearly identify what technical knowledge existed before their project began. Leveraging publicly available resources, open-source frameworks, Stack Overflow solutions, or commercial off-the-shelf components without modification does not constitute SR&ED.

**Document Technological Limitations**

Teams must clearly articulate the shortcomings and limitations of existing technologies and correlate these back to the established knowledge base through documentation.

**Technical Training is Not SR&ED**

Professional development addressing competency gaps or determining what's possible within a field does not qualify as eligible work, even though technically competent professionals contribute to the knowledge base.

**Support Work Becomes Eligible**

Once technological uncertainties are identified, subsequent work "commensurate with the needs and directly in support of" SR&ED becomes claimable, even if that work would otherwise be ineligible.

**Repeated Failures Indicate Potential SR&ED**

"Repeated failures and abandoned approaches are typical indicators of potentially eligible SR&ED work." Similarly, struggling to balance technological tradeoffs — such as performance versus computational efficiency — often signals SR&ED activity.

**Time Tracking Requirements**

The CRA requires some form of time tracking but doesn't mandate specific tools. Alternatives like story points are acceptable if applied consistently.

## Blockchain Example Available

The CRA provided a blockchain project example demonstrating how to structure submissions for cryptocurrency, bitcoin, or distributed ledger technologies. [Contact us](https://entax.ca/contact) if you'd like to discuss how this applies to your project.