Reviewed by Logan Hanson, BSc, CPA. Last verified against CRA guidance on July 29, 2026.
Usually because the documentation got thinner, not because the R&D did. When a claim drops sharply from one year to the next with no clear explanation, the cause is rarely a real change in your technical work. It is almost always a shallower write-up: high-level project summaries that skip the technical depth the CRA actually wants to see, which quietly leaves eligible work on the table.
A smaller number and a shrug is not an explanation. If your activity was steady but your refund fell, that is a documentation problem, and documentation problems are fixable.
A few things move the number, and most of them have nothing to do with how much R&D you did.
Genuine rule changes do happen, and a good advisor will name the exact projects and costs affected. If nobody can, be skeptical.
Yes, and you can do it in any year. There is no lock-in to the firm that filed your last claim. A new advisor can rebuild the current year’s claim from the ground up, sitting down with your technical team to recover the depth a thin write-up missed. Before you switch, it is worth reading how to choose an SR&ED consultant and the questions to ask an SR&ED consultant.
A 12-person IT and software services firm watched its SR&ED claim fall from $115,000 to $55,000 in a single year under its previous consultant, with no clear explanation. The underlying technical work had not changed. What had changed was the documentation: high-level project summaries with none of the technical depth CRA looks for.
We sat down with the development team to understand the technical problems they had actually been solving that year, then built the claim around that detail. The rebuilt claim came back at $120,000. Because the firm was leaving a percentage-fee arrangement for our flat fee, the recovered $65,000 went to the company’s bottom line rather than to a percentage cut, on top of an $8,000 fee reduction versus the prior year. This is one of eleven engagements in our full SR&ED case studies document.
Consider a Canadian-controlled private corporation (CCPC) whose eligible work supports $300,000 in salaries and $54,000 paid to an arm’s-length Canadian contractor. The contractor counts at 80%, adding about $43,000, for a qualifying base near $343,000. At the enhanced 35% refundable rate, that is roughly $120,000 in federal credit, before the prescribed-proxy overhead amount and provincial credits, which usually push the total higher.
Now imagine a thin write-up that only captured half of that eligible base. The same year’s work would yield a far smaller refund, not because the R&D shrank, but because it was never documented. That credit is refundable for a CCPC, paid as cash even if no tax is owed, up to the enhanced ceiling of the first $6 million of expenditures, for up to $2.1 million per year. Treat that as a maximum that phases out with taxable capital and is shared among associated corporations.
Run through this if your refund dropped or you suspect it is smaller than it should be.
We rebuild claims to a single standard, no matter who filed them before, by sitting down with your technical team rather than working from a generic project overview. And we charge a flat fee billed monthly, published openly and roughly half the lifetime cost of percentage-based firms. We are the only SR&ED provider we are aware of that publishes its pricing. When we recover money a thin claim missed, that money stays with you.
The work is backed by 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. For a sense of what advisors cost, see our guide to SR&ED consultant costs in Canada.
If your SR&ED refund fell and nobody can explain why, treat it as a documentation red flag worth a second opinion. The eligible work is often still there, waiting to be described properly. A free consultation usually tells you within an hour whether your last claim left money behind. For the bigger picture, see our State of SR&ED hub.
Most often the documentation got thinner, not the R&D. If your technical work was similar to last year but the claim dropped sharply, the usual cause is a shallower write-up that leaves eligible work unclaimed, not a real change in your activity.
Yes. You can change advisors in any year, and you are not locked in to the firm that filed last time. A new advisor can rebuild the claim on stronger technical documentation for the current year.
Not necessarily. A claim can shrink because the narrative got shallower or eligible projects were left out, even when the underlying R&D is unchanged or growing. The number reflects how the work was documented as much as the work itself.
Ask exactly which projects and costs changed and why, and ask to see the technical narrative. A vague answer like the rules changed is not enough without specifics you can verify.
Often yes, and the gap widens as your claim grows. A percentage fee scales with the size of the refund, while the work of preparing the claim does not, so a flat fee keeps more of a larger refund with you.
Yes. We review the claim history, sit down with your technical team, and rebuild the documentation to the same standard we use for every client, on a published flat fee rather than a percentage.
This article is general information, not tax advice. Tax figures depend on your corporation type, province, and taxation year.
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