Time Tracking Software Applications for SR&ED
Your Scientific Research and Experimental Developmental (SR&ED) refund is calculated as a percentage of your qualified SR&ED expenditures, and an important element within these qualified SR&ED expenditures is the money spent on SR&ED eligible salaries and subcontractor fees. Ensuring your SR&ED claim is supported by contemporaneous documentation, including time tracking evidence, is crucial and will affect whether the claim is filed as accepted, reviewed, or denied. We have been asked if there is a time tracking software available with the ability to track all the key elements the Canada Revenue Agency (CRA) requires for your SR&ED claim.
Time Tracking Software Applications for SR&ED
There is a multitude of time tracking software applications available, one example our team has used with great success in the past is the Time Doctor software. The time tracking software applications listed below have also been used successfully for SR&ED projects:
(Note: The scroll function is at the bottom of the table.)
| Software |  |  |  |  |  |  |  |
|---|---|---|---|---|---|---|---|
| Harvest | Toggl | ClickTime | TimeDoctor | Everhour | TimeCamp | Clockify | |
| Website | http://www.getharvest.com | https://www.toggl.com | http://www.clicktime.com | http://www.timedoctor.com | https://everhour.com | https://www.timecamp.com | https://clockify.me/ |
| Access | - SaaS/Web-based - App for iPhone and Android | - SaaS/Web-based and downloadable - App for iPhone and Android - Browser Plugin extension | - SaaS/Web-based - Timesheet App for iPhone and Android | - SaaS/Web-based and downloadable - App for iPhone and Android | - SaaS/Web-based - App for iPhone - Browser Plugin extension | - SaaS/Web-based - App for iPhone and Android - Browser Plugin extension | - SaaS/Web-based - App for iPhone and Android - Browser Plugin extension |
| Reports | - Wide selection of visual reports - Budgets, Team capacity, Internal costs, Time spent on tasks | - Multiple levels of detail to view data from - Client-ready visuals - Export all reports (PDF, CSV, Excel, URL) - Schedule reports to email automatically | - Ability to create custom reports - Expense Reports, Project budgeting reports - Timesheet management reports for easy administrative purposes - Employee resource management, utilization and billable hours reports - Export to Excel and PDF | - Daily email productivity notifications outlining time spent on tasks, total time worked - Weekly report including time spent on emails, chat, websites visited and application categories used | - Ability to create custom reports - Reminders and notifications for timers and time tracking - Schedule reports to email automatically | - 10+ built-in reports - Ability to create custom reports - Export and share as PDF, Excel or via email - Invite guest to view project platform | - Ability to filter data to create custom reports - Breakdown and view data by day, activity , and user. - Export and share as PDF, Excel or via email |
| Tracking Configured for SR&ED work | No | Yes | No | No | No | No | No |
| Other Features | - Streamlined Invoicing - Online payments - Automatically copy invoices and payments to accounting software - Automatically reminds employees to submit time sheets - Flexible timekeeping and invoicing (by time or by project) | - Time audits and reminders - Billing and Invoicing - Flexible employee time tracking - Calendar integrations - Payroll - Team scheduling and management tools - Team dashboard | - Mobile notifications remind employees to submit time sheets - Totals billable hours and includes details on how time is spent - Track expenses by taking pictures of receipts within mobile app - Populates expenses on designated reports for reimbursement, invoicing, or cost-accounting once approved - Automatically track accrual of sick and vacation time - Request and approve time off through app | - Matches tasks with projects - Sends distraction alerts when high amounts of time on Youtube, Facebook, etc., are detected - Takes regular screenshots of the computer screen (when activated) - Software available on all devices - Activity Tracking - Offline time tracking - Payroll - 24 hour support | - Activity Tracking, timed or manual - Clock-in, clock-out tool - Time estimate tool, and auto-stop timer - Automatically track accrual of sick and vacation time - Email alerts for project budgets - Custom task rates - Automate data transfer with Zapier tool - Billing and Invoicing | - Productivity Tracking - Automatic time tracking - Billing and Invoicing - Rapid timesheet approvals - Attendance (in lieu of clocking in and out) - Self-hosted on company's server or private cloud | - Unlimited Tracking - Unlimited projects - Unlimited reports - Team chat - Unlimited Users - Self-hosted on company's server or private cloud - 24 hour support |
| Integration | - 56 Integrations available including Google Docs, Google Apps, Jira, Xero and more. - See details | - Over 100 integrations available including Google Docs, Google Apps, Jira, Xero and more. - See details | - Integration with certain CRM, accounting ,and payroll software applications. - See details | - 64 Integrations for project management, Collaboration, Development, Accounting & Invoicing, CRM, and Sales. - See details | - Over 100 Integrations for project management, Collaboration, Development, Accounting & Invoicing, CRM, and Sales. - See details | - Over 100 Integrations for project management, Collaboration, Development, Accounting & Invoicing, CRM, and Sales. - See details | - 40+ Integrations for project management, Collaboration, Development, Accounting & Invoicing, CRM, and Sales. - See details |
| Data Security | - Data encryption via SSL - PCI-DSS compliance - Physical and remote security - Server host is SOC 2 certified - Data protected by RAID arrays over multiple storage units - Data backup multiple times per day to minimum 2 physical data centers - See details | - Data encryption - GDPR-compliant - Storage in several separate physical locations - See details | - Data encryption - Data backup every 30 minutes to multiple machines - Encrypted snapshot of data moved off-site daily - Data center contains advanced entry security, fire protection, and extensive backup power generation. - Data protected by RAID arrays over multiple storage units - Load-balancing & Data Mirroring - Secondary facilities to restore access in the event that the primary datacenter is damage or unavailable. - See details | - Data encryption via SSL - 24/7 monitoring - Two-factor authentication (2fa) - Network and overall infrastructure security - Internal system logging - Daily data backup - Physical security - See details | - Data encryption via SSL/TLS - GDPR-compliant - Backups retained for 30-days - See details | - Data encryption via TSL - ISO 27001 certified - GDPR-compliant - Amazon Web Service security measures - Automated vulnerability scans every week, in-depth security assessments twice a year, regular spot checks - Use of Cloudflare in front of the application and our front-end assets to mitigate the risk of DDoS attacks - Regular data backup - See details | - Data encryption via SSL/TLS - ISO 27001 certified - GDPR-compliant - Amazon Web Service security measures - Storage in several separate physical locations - company-specific data inside Cloud Clockify is kept separate through a logical separation at the data tier, based on application-level access permissions and roles you set up in your workspaces - See details |
| Cost | - Subscription-based - Limited free version (Maximum 1 seat/ 2 projects) - Paid version $12/month USD (unlimited) - 30-day free trial period - See details | - Subscription-based - Limited free version (Maximum 5 teams) - Paid versions from $10/user/month - 30-day free trial period of Toggl Track Premium Plan - See details | - Subscription-based - Starting at $10/user/month - 14-day free trial period - See details | - Subscription-based - Paid versions from $7/month to $20/month - 14-day free trial period - See details | - Subscription-based -$8.50/user/month (USD) - 14-day free trial period - See details | - Subscription-based - Limited free version (max 1 integration) - Paid version from $7/user/month USD (unlimited) - 14-day free trial period - See details | - Subscription-based - Free version available - Paid version from $3.99/user/month USD (unlimited) - See details |
There are a few SR&ED-specific software programs that can track time, however, these programs are not limited to time tracking only, but are comprehensive project management software applications and may not integrate easily with your company’s current processes. Be sure to research any software you consider and weigh the risks against the benefits of adopting a brand new process. Below are three examples of SR&ED-specific tracking software applications:
- R&DBASE | Turn Research into Development (rdbase.net): This software system is designed for researchers to benchmark efforts against prior art and then file claims for patents, grants & research tax credits.
- Sredio | SR&ED Automation and Management: The Sredio software generates prefilled SR&ED tracking reports weekly which are specifically tailored to the SR&ED filing requirements of the CRA.
-
R&D | SR&ED Project Management Software | Acute360: A project management platform that manages R&D projects and tasks based on the concepts of the scientific method, knowledge management and collaborative thinking. It provides a methodology for managing R&D projects from both technical and financial perspectives.
However, the effectiveness of any software ultimately depends on the systems already being used. It is important to take the time to do an inventory of what systems are currently in use, and then evaluate if:
- They can provide some degree of time tracking, if not;
- What software might integrate seamlessly with them?
Keep in mind that introducing a new, siloed system generally doesn’t work – even with a good change management strategy. It is advisable to find a time tracking software that can be integrated into your current systems.
Key things to look for in the software systems considered include:
- Regular reporting/reminders for team members and managers to track their time.
- Integration with pre-existing systems, to avoid double entry
- Dashboards for ease of reviewing data.
- Ease of use, to minimize adoption issues
Unfortunately, it is difficult to be more specific, but there are many implementations – from complex tracking and reporting software to simple Google Sheets rollups, which have been successfully implemented to address all the key elements required by the Canada Revenue Agency (CRA) for SR&ED claims. The process of time tracking, while essential, is unique to each situation.
As with most software applications, the most difficult part is not the selection of the software but the roll-out to the larger team and encouraging the adoption of the new process. If someone in-house has trained in change management, it may be prudent to leverage their skills for both the time tracking and documentation aspects that are required for both SR&ED and IRAP. If no one in-house is trained, the ‘Change Management Certification Program | Prosci‘ course specializes in training individuals in the knowledge, skills, and tools needed to drive successful change initiatives and may be helpful.
Why is Time Tracking Important?
The SR&ED Salary or Wages Policy states:
A claimant should be able to show that the salary or wages are for SR&ED work performed by employees of the company on activities that are considered to be directly engaged in SR&ED. 1
Even though time tracking can be difficult, especially when a project spans multiple claim periods or involves many team members, ensuring your SR&ED claim is supported by contemporaneous documentation is crucial. This is why tracking the employees and contractors that worked on your SR&ED projects, as well as their respective hours and tasks worked is essential.
Time Tracking Requirements of the CRA
While the CRA does not explicitly state what is required concerning time tracking documentation, they have expressed that supporting documentation should convey what work was completed, who was involved, when the work occurred, and how the expenditures associated with the work were calculated. These details should be included within or associated with the time tracking documentation used.
To support your scientific research and experimental development (SR&ED) claim, you need to keep documents and other information to show that eligible work was performed and allowable expenditures were incurred in the year for which you are filing your claim. This information should convey what work was done, who was involved with the work, when the work was conducted, and how you calculated the expenditures associated with the work. 2
If an SR&ED claim is selected for a review, the supporting documentation collected while the SR&ED work was being carried out will be essential in ensuring the review goes smoothly. The time tracking information is an important component and is required to fully support the expenditures claimed as SR&ED. The CRA has detailed all the salary or wage amounts that need to be included or excluded from SR&ED calculations. To ensure the contemporaneous documentation being used to support an SR&ED claim is complete and thorough, taxpayers should ensure all the amounts listed above have been considered and documented for each employee included within their SR&ED claim.
It is recommended to track the time and work of all employees involved in the SR&ED. The SR&ED Salary or Wages Policy states:
In addition, employees, including managers and supervisors, are considered to be directly engaged in SR&ED when they are performing support work that is commensurate with the needs and directly in support of the basic or applied research or experimental development work. 3
Specified Employees’ salary or wages inclusions and exclusions differ slightly as bonuses and remunerations based on profits are not allowable SR&ED expenditures, however, if the individual is considered to be directly engaged in SR&ED, their related expenditures are also required for the SR&ED claim. For more information on specified employees please see our article Specified Employees in SR&ED: Restrictions and Regulations.
Conclusion
Every SR&ED claim must be supported by contemporaneous documentation. The presence and quality of the supporting documentation will affect whether the claim is filed as accepted, reviewed, or denied. Time tracking is a vital tool to prove the expenditures claimed do in fact relate to the SR&ED work completed. There is a multitude of time tracking software available that can track the key elements required by the CRA for your SR&ED claim, however, there is no one right answer for which of these software applications are best suited to SR&ED as each claim is unique. Please see our previous article What To Do: Time Tracking in SR&ED for more details on time tracking requirements within the scope of SR&ED.