Is your SR&ED claim leaking cash? How to maximize your 2026 refund

Tax season is never the time to leave money unclaimed, especially when it comes to SR&ED. In our recent webinar (hosted by Sarah Lesperance, Head of SR&ED Growth and Ali Afshar, Head of Claims Solutions at Employment Hero), we broke down the most common mistakes businesses make when preparing their SR&ED claims and why the quality of your payroll, finance and time-tracking data can make or break the value of your claim.

SR&ED is the largest government program for innovation funding in Canada, with more than $5B disbursed annually. But despite the scale of the opportunity, many businesses miss out on eligible dollars because their records aren’t structured well enough to support a strong, defensible claim.

The three tests that matter

To qualify for SR&ED, businesses need to be able to document and prove three core elements: technological uncertainty, technological advancement and systematic investigation or experimentation.

That means SR&ED isn’t just about having innovative work underway. It’s about showing clear evidence of the work, the costs tied to it and the reasoning behind why that work mattered from an R&D perspective.

Technological uncertainty vs. routine engineering

A key takeaway from Sarah and Ali was the distinction between routine engineering and SR&ED. To pass the three tests, you must prove you encountered a ‘roadblock’ that standard, publicly available knowledge couldn’t solve. It’s not just about the success of the project; documenting your ‘failed’ iterations and the reasons why a standard approach didn’t work is often your strongest evidence for a claim.

Where claims lose value

One of the biggest themes from the session was simple: your SR&ED claim is only as strong as the data behind it.

The most common problem we see is disconnected systems. Payroll lives in one place, finance in another and engineering work gets tracked somewhere else entirely, often in tools like Jira or GitHub. When those systems don’t line up, the result is missed eligible costs, inconsistent reporting, and increased audit risk.

Mistake 1: Payroll not structured for SR&ED

If your payroll setup doesn’t clearly identify R&D employees, tie compensation to eligible work, or include variable pay where appropriate, you may be under-claiming salaries and creating avoidable issues during CRA review. A common mistake we see is customers who promote someone internally and their new title no longer reflects the R&D work they are still responsible for.

Hidden contributors

Don’t stop at your software engineers. Ali pointed out that many businesses miss eligible ‘support’ work. This includes Product Managers who define technical requirements to overcome uncertainties, or QA testers who are performing the ‘experimental’ portion of the work. If they are directly contributing to the technical problem-solving, their salary—and even a portion of their manager’s salary—can often be included.

Mistake 2: Weak time allocation

Estimating time at year-end is a major red flag. Without consistent time tracking and a clear link between time and work performed, businesses weaken the credibility of their claims and increase the risk of adjustments.

Mistake 3: Financial data that doesn’t tie out

Claims need to reconcile across payroll, contractor costs, and expenses. If the numbers don’t match, or project costs aren’t mapped properly, that can create delays, scrutiny, and questions during review.

Mistake 4: Filing too early

Rushing to file before payroll and time data have been validated can lock in mistakes. Filing without a complete SR&ED review can lead to amendments, delayed refunds, and lost claim value

What to fix before you file

The webinar also walked through a practical pre-filing checklist. Before submitting your claim, you should identify all SR&ED-eligible employees, align roles with actual work performed, validate your time allocation method, reconcile payroll and financials with the claim, capture missed contributors, and make sure your documentation supports everything you’re claiming.

That preparation matters because most tax-season mistakes are preventable. When payroll and HR data are set up properly, they become the foundation for a stronger, more defensible SR&ED claim.

How Employment Hero helps

At Employment Hero, we help businesses simplify the SR&ED process by bringing the right data together earlier, before filing becomes a scramble.

Our approach starts with a discovery call to understand the work being done and estimate claim potential, followed by a technical kickoff, data gathering, claim writing and a final check-in before submission to CRA. For our platform users, we can pull payroll, timesheets and project data directly, helping save 15+ hours while protecting the claim in an audit.

Rather than a manual year-end scramble, we help you target the maximum possible refund—which can be up to 64% of technical salaries. Because our platform acts as the ‘source of truth’ for payroll and time-tracking, we can map your technical work (from tools like Jira) directly to your financial data. This doesn’t just save 15+ hours of manual work; it creates the ‘nexus’ between work and cost that the CRA requires to approve a claim without a lengthy audit

Calculate the value of your SR&ED refund with our SR&ED calculator today!  

Final takeaway

If there’s one message from the webinar, it’s this: SR&ED success starts with your data.

The businesses that win at tax time are the ones that prepare early, keep their records aligned, and treat payroll, HR and finance as part of the claims strategy, not an afterthought. If you want a more confident, higher-quality claim, the best time to fix the gaps is before you file.

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