Reviewed by Logan Hanson, BSc, CPA. Last verified against CRA guidance on July 29, 2026.
By making every claimed experiment traceable to a specific record. In science-heavy fields like pharmaceuticals, the reviewer’s method is predictable: they work backwards from the physical evidence, checking whether the experiments described in your claim actually appear in your batch records and lab notebooks. If each statement in the claim ties to a record the reviewer can follow, the claim substantiates itself.
The failure mode is not bad science. It is a claim written at too high a level to connect to the underlying data the CRA is checking against.
In pharma and other lab-driven claims, reviewers cross-check the narrative against the physical trail your work already generates. You can see the CRA’s approach on the SR&ED program pages. The usual evidence includes:
Yes, when there are genuine formulation or stability challenges that require systematic experimentation to resolve. Routine batch production to a known recipe is not eligible, but investigating an unresolved formulation or stability problem, where the outcome is uncertain and you have to test your way to an answer, meets the SR&ED tests of uncertainty, systematic investigation, and advancement. Failed batches count too, as long as they were part of the investigation.
A ten-person pharmaceutical company had its claim flagged for review, focused on whether the formulation experiments described in the claim matched the company’s actual batch records. The science was sound, with genuine formulation and stability challenges, but the original claim summarized the work at too high a level to visibly connect to the batch data the CRA was checking.
We went through the batch records line by line with the technical team and rebuilt the narrative so each described experiment tied directly to a specific, traceable batch. The reviewer could follow every claim statement to a physical record, which let them substantiate the work and approve it in full. The $263,000 claim was upheld with no reduction. This is one of eleven engagements in our full SR&ED case studies document.
Take a Canadian-controlled private corporation (CCPC) with $600,000 in eligible scientist and technician salaries, $100,000 paid to an arm’s-length Canadian contract lab, and $71,000 in materials consumed or transformed across formulation runs. The contractor counts at 80%, adding $80,000, for a qualifying base near $751,000. At the enhanced 35% refundable rate, that is roughly $263,000 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, paid as cash even if no tax is owed, up to the enhanced ceiling on the first $6 million of qualifying 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. When a claim like this is reviewed and every experiment ties to a record, the full amount holds.
If your R&D runs on batches and bench work, make sure a reviewer could trace it.
When a reviewer is going to cross-check your narrative against physical records, the claim has to be built from those records in the first place. We work through your batch data line by line with your technical team, on 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.
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 more, see our guides on how SR&ED services improve refunds and maximizing refundable claims.
When the CRA cross-checks lab records, the claim that survives is the one where every experiment leads back to a specific, traceable record. Build it that way from the start and a review becomes a formality. A free consultation usually tells you within an hour whether your claim is traceable enough to hold. For the bigger picture, see our State of SR&ED hub.
By making every claimed experiment traceable to a specific physical record. When each statement in the claim ties directly to a batch record or lab notebook the reviewer can follow, the claim substantiates itself.
Yes, when there are genuine formulation or stability challenges that require systematic experimentation to resolve. Routine batch production to a known recipe does not qualify, but investigating an unresolved formulation problem does.
Reviewers often work backwards from the physical evidence, such as batch records, lab notebooks, and stability data, confirming that the experiments described in the claim match what actually happened on the bench.
Because the science is highly verifiable against physical records. A claim summarized at too high a level to connect to specific batch data invites questions, even when the underlying work is sound.
Yes. When each experiment ties to a traceable record, a review can close with no reduction. In one engagement, a 10-person pharmaceutical company kept 100% of a $263,000 claim after the narrative was tied to its batch records.
We work through the batch records line by line with your technical team so every described experiment ties to a specific, traceable batch, on a published flat fee with review defence included.
This article is general information, not tax advice. Tax figures depend on your corporation type, province, and taxation year.
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