Can you claim SR&ED without timesheets?

Yes, potentially. CRA recognises evidence beyond timesheets when assessing SR&ED labour allocations. Whether that evidence is sufficient depends on the work, the records and the allocation method. Missing timesheets do not establish eligibility or justify an unsupported percentage of payroll. CRA Salary or Wages Policy, section 13

At a glance

Reviewed August 31, 2026. This guide concerns federal SR&ED evidence and a practical review process for incomplete time records. It does not calculate a credit or decide whether a particular project qualifies. Separate employment and payroll recordkeeping obligations still need attention.

What CRA needs to establish

Start with the work itself. The Income Tax Act defines SR&ED around systematic investigation or search through experiment or analysis. Experimental development must pursue technological advancement; the definition also excludes activities such as routine quality control and commercial production. A development department or project label does not resolve that assessment. Income Tax Act, subsection 248(1)

For a software project, review what qualifies as SR&ED in software development before trying to allocate the team's time. Otherwise, a precise spreadsheet can attach costs to the wrong activities.

CRA's T4088 guide asks claimants to support both the work performed and the expenditures incurred. Appendix 2 favours evidence created while the work happened. It also says a lack of detailed documents should not, by itself, discourage a claim, particularly for a first-time claimant; CRA can help identify other supporting evidence. Work with no relevant support is likely to be disallowed. T4088, Appendix 2

What the form actually asks about timesheets

The evidence checklist on Form T661 (26) lists resource-allocation records and timesheets at line 271. Other entries cover project plans, experimental design, source code and test results. The form asks which evidence you have; checking a box does not establish that every claimed activity or dollar is supported. It also instructs you to retain these items for a possible review rather than submit them with the claim. Form T661 (26), page 3

CRA's salary policy describes timesheets as useful evidence, alongside sources such as supervisors' summaries and records generated during the work. It expects the allocation to be supportable, with a low risk of material error. Even existing timesheets may need additional evidence when business project codes do not correspond to SR&ED projects. CRA Salary or Wages Policy, sections 13.4 and 13.6

A practical review when timesheets are missing

The following is a suggested preparation workflow, not a CRA-prescribed template or a promise that a reconstruction will be accepted.

Preserve the records before reconstructing anything

Make a dated inventory of what exists. Keep original exports and note who supplied each one. Ask for the versions from the claim period, including records of abandoned approaches. A revised project summary can be useful, but label when it was written and identify the older records behind it.

Avoid starting with a blank annual percentage beside each employee's name. That invites a conversation about the desired total before anyone has reviewed the work.

Review one person and one period at a time

Choose a period short enough to discuss concretely. Ask what the person was doing, which activities are being considered for the claim and what competing assignments appear in the records. Have the technical lead explain unfamiliar project names before the finance team maps them to payroll.

Use a working table with columns for the employee, period, activity, source reference, proposed allocation and unresolved questions. Leave the allocation blank when the evidence has not yet been reviewed. A blank cell is easier to investigate than a plausible number with no explanation.

Separate recorded facts from later judgements

An issue closed on a particular date is a recorded fact. The time spent on it may still be unknown. Do not automatically convert ticket counts, story points or code commits into hours. Someone would need to explain why that conversion reflects the actual work, including activity that produced no commit.

Record the preparer's reasoning in a separate column. Ask the person who supervised the work to review it and flag disagreements. Keep those questions visible until they are resolved; a polished narrative should not make an evidence gap disappear.

Reconcile the proposed labour amount

Have the financial reviewer trace the proposed amount back to the payroll records for the relevant period and examine the applicable salary rules. Check that the same work has not been allocated twice across projects. If the technical and payroll records cannot be reconciled, investigate before finalising the claim.

This reconciliation also serves a broader obligation: section 230 of the Income Tax Act requires businesses to keep records and books sufficient to determine tax payable and amounts subject to collection or withholding. A project narrative does not replace those underlying records. Income Tax Act, section 230

A hypothetical example: one engineer, mixed work

Suppose an engineer spent part of a month investigating an unresolved processing problem while also handling customer support. No project timesheet exists. The available records include dated test runs, issue discussions, a support rota and payroll records.

The preparer first asks the technical lead to explain the investigation and identify which activities warrant an eligibility review. The support rota raises a separate question: which days or portions of days were spent on customer work? Test timestamps help establish when experiments ran, but do not automatically measure the engineer's working time.

The team then documents a proposed allocation, the evidence supporting it and any remaining uncertainty. If a week has almost no supporting detail, they investigate that week separately rather than extending a better-documented week's allocation across the month.

This example illustrates a review process. It makes no finding that the work qualifies or that CRA would accept an amount.

Frequently asked questions

Are timesheets the only acceptable SR&ED records?

No. CRA identifies several potential sources for supporting labour allocations. Sufficiency depends on their reliability and the circumstances; there is no blanket exemption from substantiating the claim. CRA Salary or Wages Policy, section 13.4

Can a later explanation help fill an evidence gap?

A later explanation can identify records to investigate. Keep its preparation date clear and avoid presenting it as an original record. CRA's preference remains evidence generated as the work happened. T4088, Appendix 2

Does this mean employers can stop recording working hours?

No. Employment-law requirements are separate. Ontario, for example, has requirements for recording working hours, with specific exceptions for some salaried employees. Check the rules applicable to the employer and employee before changing a recording practice. Ontario employment-record guidance

What should a claim team ask the client for first?

Ask for the records that already exist for one project and period, then work through the gaps with the people involved. For an inventory covering the wider claim file, use the SR&ED documentation guide. Obtain advice on the actual facts before deciding what work and expenditure to claim.