Reviewed by Logan Hanson, BSc, CPA. Last verified against CRA guidance on July 29, 2026.
The most common thing that goes wrong is conflating novelty with uncertainty. Founders working from the CRA’s online guide often argue we built something new, when the program actually asks did you face a technological uncertainty and investigate it systematically. Those are different claims, and CRA reviewers are trained to catch the difference. A draft that describes the product outcome rather than the investigative process is exactly what draws scrutiny to a first-time filing.
The frustrating part is that the underlying R&D is often genuinely eligible. The work was real. The write-up just told the wrong story.
Novelty is about whether something is new to the market. Uncertainty is about whether you knew how to achieve it. SR&ED cares about the second. A product can be brand new and still be routine engineering, and a product can be unremarkable while the work behind it resolved a genuine technological uncertainty. Every eligible project has to show three things:
You can read the CRA’s own framing on the SR&ED program pages.
A first-time filer has no track record with the CRA, so the technical report carries all the weight. When that report reads like a sales pitch for a new project rather than a systematic investigation, it stands out for the wrong reasons. It is not that the CRA is hostile to startups. It is that a product-shaped narrative does not answer the questions the program is built around, so a reviewer has to ask them.
A cleantech robotics startup prepared its first claim independently, treating it like a form to fill out rather than a technical submission that has to withstand scrutiny. The draft was written more like a sales pitch for the new project than a systematic investigation, arguing we built something new instead of we faced a technological uncertainty.
Before filing, the founder decided to consult us, and we were able to flag the issue. The underlying R&D was genuinely eligible, and the team was solving real, unresolved engineering problems. We walked through the actual engineering challenges with them and reframed the narrative around the specific uncertainties they had worked through, rather than the product they had built. Together we rewrote the technical report, and the $70,000 first claim was accepted without a review. This is one of eleven engagements in our full SR&ED case studies document.
Take an early-stage Canadian-controlled private corporation (CCPC) with $180,000 in eligible developer and engineer salaries and $25,000 paid to an arm’s-length Canadian contractor. The contractor counts at 80%, adding $20,000, for a qualifying base near $200,000. At the enhanced 35% refundable rate, that is roughly $70,000 in federal credit, before the prescribed-proxy overhead amount and provincial credits, which usually push the total higher.
For an early-stage CCPC that owes no tax, that credit still arrives as cash, which is why SR&ED matters so much to startups. The enhanced 35% rate applies to up to the first $6 million of qualifying expenditures, for up to $2.1 million per year, a ceiling that phases out with taxable capital and is shared among associated corporations. Getting the narrative right is what protects that cash.
Before you submit a claim you wrote yourself, check it against this.
The highest-leverage moment for a first claim is before it is filed, when reframing costs nothing and protects everything. We walk through the real engineering challenges with your team and build the narrative around the uncertainties, 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 first-timer guidance, see our SR&ED facts for first-time claimants and first-time SR&ED claim help.
Filing SR&ED yourself is possible, but the difference between a clean acceptance and a triggered review is often just how the work is framed. If your R&D is real, describe the uncertainty, not the product, and have someone check it before you submit. A free consultation usually tells you within an hour whether your draft is ready. For the bigger picture, see our State of SR&ED hub.
They can, but the most common mistake is describing the product they built instead of the technological uncertainty they resolved. A product-focused draft is exactly what draws CRA scrutiny to first-time claims.
Conflating novelty with uncertainty. Building something new is not the SR&ED test. The test is whether you faced a genuine technological uncertainty and investigated it systematically.
A first claim written like a sales pitch for a new product, rather than a systematic investigation, is a common trigger for CRA review, because it does not show the uncertainty and experimentation the program is built around.
If the R&D is genuinely eligible, a small amount of expert framing before you file can protect the entire claim. It is often worth a review of the draft before submission rather than after a problem arises.
Yes, and before filing is the ideal time. Reframing the narrative around the actual uncertainties before submission avoids the review that a product-focused draft would otherwise invite.
We walk through the real engineering challenges with your team, reframe the narrative around the uncertainties you worked through, and file on a published flat fee, leaving you a repeatable process for next year.
This article is general information, not tax advice. Tax figures depend on your corporation type, province, and taxation year.
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