Reviewed by Logan Hanson, BSc, CPA. Last verified against CRA guidance on August 4, 2026.
A tech company’s SR&ED refund is usually smaller than it should be, and the reason is almost always a gap: something eligible that got left out or documented poorly. These gaps are quiet. You don’t see them, because you never see the refund you didn’t claim. Here are eight SR&ED gaps that shrink tech refunds, and how to close each one.
Eight gaps shrink tech refunds most: incomplete project coverage, omitted contractors, missed support work, weak time tracking, thin evidence, product-focused framing, overlooked overhead, and late filing. Here’s each one, and how to close it.
Claiming only the flagship project misses eligible work scattered across the rest of your year. The hard integration, the performance fix, the uncertain slice in a side project all count. Close it by reviewing your whole year, not just the obvious project.
Canadian arm’s-length contractors are claimable at 80% of the eligible amount, and leaving them out directly shrinks your eligible expenditures. If you outsourced part of the hard technical work in Canada, close the gap by including it.
Work that enabled the experiment, like a test harness or data tooling built to run your trials, can qualify as support work. On its own it wouldn’t, which is why it gets left out. Close the gap by claiming support work that was directly tied to the eligible experiment.
Without a way to trace who worked on the eligible work and how much, you guess at allocations, and cautious guesses run low. Close it by labelling R&D tickets and projects during the year so partial time can be allocated with confidence.
Without contemporaneous records, you drop eligible work you can’t confidently back up, and the claim gets weaker under review. Close it by keeping the commits, tickets, benchmarks and failed branches you already produce, so the work can be shown.
Writing the claim around what the product does, instead of the technological uncertainty, gives the CRA less to approve and invites reductions. Close it by framing each project around the technological uncertainty, the systematic investigation and the advancement you sought, in the CRA’s terms.
Overhead can be claimed through the prescribed-proxy amount, currently 55% of eligible salaries, or by tracking actual costs. Skipping it, or not comparing the two methods, quietly shrinks the claim. Close it by calculating both and taking the higher one.
Leaving the claim to the deadline weakens it and risks missing the 18-month filing window entirely, and the CRA very rarely accepts late claims. Close it by capturing evidence through the year and filing with room to spare. This is the one gap with no fix after the fact.
Small gaps compound into a large one. Take a CCPC eligible for the enhanced 35% refundable rate that claimed only its obvious project, capturing $312,000 in salaries, for about $109,200 in federal credit before overhead and provincial credits. Closing three gaps adds:
That lifts the base from $312,000 to about $453,000, for roughly $158,550 in federal credit before the prescribed-proxy overhead amount and provincial credits, which the overhead gap would add to again. This is illustrative, so your numbers will vary. For an eligible CCPC the enhanced 35% credit is refundable, applies to the first $6 million of qualifying expenditures, provides up to $2.1 million a year, phases out with taxable capital, and shares that limit among associated corporations. See our State of SR&ED overview for the wider picture.
Run your claim against each gap before you file.
SRED.ca charges a flat fee, billed monthly, never a percentage or contingency fee, which usually works out to roughly half the lifetime cost of a percentage-based firm. As far as we know, we’re the only SR&ED provider that publishes its pricing on its website. Closing these gaps is the core of what we do: a whole-year review, every cost category, evidence tracked as you go, and the right overhead method. We’re CPA-owned, audit defense is included, and if the CRA approves less than 75% of the filed claim we waive our fees, as set out in our 75% guarantee. If there’s no eligible work in your year, you don’t pay.
Each of these gaps is small on its own, but together they’re the difference between a thin tech refund and a full one. Review your whole year, capture every eligible cost, document as you go, and file early, and you close nearly all of them. If you’d like a review that finds the gaps you can’t see, grab a free consultation. The CRA’s SR&ED program page is the official source for the rules.
Related reading: how to avoid SR&ED documentation gaps in 2026, why tech firms struggle with SR&ED claims, and how SR&ED tax services support startup R&D credits.
A gap is eligible work or cost that was left out, or documented too poorly to claim with confidence. Gaps don’t make your work ineligible; they just mean part of your real refund never gets claimed or gets reduced under review.
Usually the whole-year gap, claiming only the flagship project, combined with the contractor gap. Together they leave the largest amount of eligible work and cost unclaimed for most tech companies.
You can close some SR&ED gaps after year-end, as long as the corporation is still within its 18-month filing window. You can still review your whole year, add contractors and support work, and reconstruct some evidence from your tools. Evidence you never captured is harder to recreate, so the reliable fix is to close gaps during the year.
Weak evidence and product-focused framing make a claim harder to defend if the CRA reviews it. Closing those two gaps makes the claim both bigger and more defensible, so they’re worth prioritising.
Work through them one by one: whole year, contractors, support work, time tracking, evidence, framing, overhead, and timing. A checklist helps, and a second set of eyes often spots the gaps you’ve stopped noticing.
A capable consultant does, because closing these gaps is the core of the work: reviewing the whole year, capturing every cost category, tracking evidence, and framing the claim properly. Ask a prospective consultant how they handle each of these gaps.
This article is general information, not tax advice. Tax figures depend on your corporation type, province, and taxation year.
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