Reviewed by Logan Hanson, BSc, CPA. Last verified against CRA guidance on July 29, 2026.
Yes. A rejection is a decision you can challenge, not a final verdict. When the CRA reduces or denies an SR&ED claim, you have two recourse routes: an administrative second review, where a different reviewer re-examines the file, and a formal Notice of Objection handled by the CRA Appeals Branch. In practice, a large share of denied claims are recovered without ever reaching the Tax Court of Canada, because the problem is almost never that the work was ineligible. It is that the eligible work was never made visible to the reviewer.
The gap isn’t between companies that innovate and those that don’t. It’s between companies that recognize their innovation and those that don’t. A rejection often just means the recognition never made it onto the page.
The single most common reason a claim is rejected on review is that the technical report did not establish technological uncertainty. Every SR&ED project has to show three things: technological uncertainty, systematic investigation, and technological advancement. When a write-up reads like a business case or a product launch summary, a reviewer sees routine development, not a scientific investigation, and disallows it.
Other frequent triggers include time and cost records that cannot be tied to specific eligible projects, and claims summarized at too high a level to connect to the underlying evidence. You can read CRA’s own view of the process on the SR&ED program pages. None of these problems mean the R&D was not real. They mean the story was told in the wrong language.
You have a clear path, and the order matters. Moving too fast to a formal dispute, or missing the deadline entirely, are both avoidable mistakes.
This is usually the first and fastest step. You ask the CRA to have the file looked at again, often by a different research and technology adviser, and you supply a stronger technical case. CRA describes this in its guidelines for resolving claimants’ concerns.
If the second review does not resolve it, you can file a Notice of Objection with the Appeals Branch. For corporations, the limit is generally 90 days from the date on the notice of reassessment. Check the date on your own notice, because the clock starts when it is sent.
This is the last resort and is rarely needed. When the technical evidence is rebuilt properly, most claims are resolved long before this stage.
You rebuild it from evidence the company already generated during the work. The goal is to reconstruct the actual investigation: the technological uncertainties the team faced, the hypotheses they tested, the failures they hit, and how they systematically closed the gap. That evidence usually lives in design iterations, test logs, version histories, and the engineers’ own memory of what went wrong.
One electric propulsion manufacturer, a 25-person company, had its SR&ED claim rejected outright. The CRA’s position was that the submission did not establish technological uncertainty, because the technical report read like a business project description rather than a scientific investigation.
The real uncertainty was buried in the engineering notes: unresolved material compatibility issues and electrical interference from high-current components, with no established mitigation approach in standard industry practice. We rebuilt the technical narrative from the ground up using the company’s design iterations, test logs, and engineer interviews. The full claim, $185,000 in refundable credits, was allowed on review about five months after the rejection. You can read this and ten more anonymized engagements in our full SR&ED case studies document.
Consider a Canadian-controlled private corporation (CCPC) with $450,000 in eligible SR&ED salaries and $100,000 paid to an arm’s-length Canadian contractor. Contractor costs are claimable at 80%, so that adds $80,000, for a qualifying base of $530,000. At the enhanced 35% refundable rate, that is roughly $185,000 in federal credit, before the prescribed-proxy overhead amount and provincial credits, which usually push the total higher.
For a CCPC, that credit is refundable, meaning it is paid out as cash even if the company owes no tax. The enhanced 35% rate applies to up to the first $6 million of qualifying expenditures, for up to $2.1 million refundable per year. Treat that as a ceiling, not a default: it phases out as taxable capital grows and is shared among associated corporations. When a claim like this is rejected and then recovered, that entire amount is the difference between walking away empty-handed and keeping money you already earned.
If your claim was just reduced or denied, work through this before you respond to the CRA.
Most SR&ED firms charge a percentage of your refund. That is an awkward model when a claim is in dispute, because your advisor’s fee depends on an outcome that is not yet settled. SRED.ca works differently. We charge a flat fee billed monthly, published openly on our website, roughly half the lifetime cost of percentage-based firms. We are the only SR&ED provider we are aware of that publishes its pricing.
Audit and review defence is included, and we back our work with a 75% approval guarantee: if the CRA approves less than 75% of the filed claim, we waive our fees. If there is no eligible work in your year, you don’t pay. We also track technical work year-round so the narrative is strong before a reviewer ever sees it, which you can see across our other guides on how SR&ED services improve refunds and maximizing refundable claims.
A rejected SR&ED claim usually means the eligible work was described in the wrong language, not that it never happened. With the right evidence and a rebuilt technical narrative, most claims can be recovered on review or objection. If your claim was reduced or denied, the first conversation is free and usually tells you within an hour whether there is a claim worth defending. For the bigger picture on the program, see our State of SR&ED hub.
Yes. You have two routes. You can request an administrative second review, where a different CRA reviewer looks at the file, or you can file a formal Notice of Objection with the CRA Appeals Branch. Many rejections are resolved at the second-review stage without ever going further.
For corporations, you generally have 90 days from the date on your notice of assessment or reassessment to file a formal Notice of Objection. Always check the date on your own notice, because that clock starts when the notice is sent, not when you receive it.
The most common reason is that the technical report did not clearly establish technological uncertainty. If the write-up reads like a business or product description rather than a systematic investigation, a reviewer often cannot see the eligible work, even when it is real.
Not necessarily. Genuinely eligible R&D is often rejected because of how it was documented and described, not because it fails the eligibility test. Rebuilding the narrative around the actual uncertainty frequently recovers the claim.
Usually yes. Most disputes are resolved at the administrative second review or the objection stage. Tax Court is the final step and is rarely needed when the technical evidence is rebuilt and presented clearly.
SRED.ca works on a flat fee billed monthly, published openly on our pricing page, with audit and review defence included. You are not paying a percentage of a refund that is still in dispute.
This article is general information, not tax advice. Tax figures depend on your corporation type, province, and taxation year.
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