CRA SR&ED AI policy: Are AI-Prepared R&D Claims Allowed?

Achim Klor
Oct 9
3 min read

As of Aug 28, 2025, the Government of Canada encourages responsible use of technology and AI to automate internal workflows across ministries and agencies.

CRA and IRAP don’t ban AI- or software-prepared SR&ED/IRAP submissions. They assess accuracy, eligibility, and disclosure (e.g., T661 preparer info).

Takeaways

Canada’s federal stance: use AI to improve operations, under a formal strategy and governance.
No CRA/IRAP prohibition on AI-drafted SR&ED claims or IRAP proposals. Claims are judged on substance.
Rejections stem from weak/inaccurate content or missing disclosures, not from using AI/tools.
If a third-party preparer helped, disclose on T661.

What Ottawa Says About AI

The AI Strategy for the Federal Public Service 2025–2027 sets expectations for departments to adopt AI responsibly to streamline or automate routine tasks and improve service delivery.

It sits alongside the Directive on Automated Decision-Making (amended in 2023) and related guidance that tell institutions to explore generative AI where risks can be managed.

Departments are already using analytics and automation in production. Other parts of government have piloted machine-learning triage tools in their workflows.

Software & AI. Allowed or not?

There is no evidence that a CRA SR&ED AI policy exists to prohibit or penalize the use of AI or third-party software in preparing SR&ED or IRAP claims.

In fact, it is common (and perfectly legal) for companies to seek outside assistance or use software when compiling their SR&ED tax credit claims.

Allowed

Preparing SR&ED and IRAP claims with third-party software or AI tools. There is no CRA rule banning this.
Using a third-party preparer as long as that is disclosed on T661 (Part 9).

Not allowed

Inaccurate, incomplete, or generic narratives that don’t meet SR&ED eligibility criteria (advancement, uncertainty, systematic investigation).
Omitting required third-party preparer details on T661 (penalties can apply under the Act).
False/overstated claims (interest and penalties, including gross-negligence penalties).

Clearing Up the Misconception

Some technical and finance leads have heard contradictory claims. For example, a fear that if SR&ED or IRAP claims are prepared with the help of software or AI, the government will somehow “spot it” and reject it.

There is no rule supporting this fear.

Both CRA and IRAP care about substance over form.

CRA SR&ED AI Policy Compliance Checklist

Disclose preparers on T661 (name, BN, fee basis).
Ensure the technical write-up covers uncertainty, experimentation, and advancement as required by SR&ED guidance.
Have a subject-matter expert review and sign off on any AI-drafted text for accuracy.
Keep evidence: experiment logs, test plans/results, code diffs, time records.
Match costs to eligible work; document methodology clearly.

Short FAQ

Does CRA ban SR&ED claims prepared by third-party software or AI?

No. CRA assesses content/eligibility and requires T661 preparer disclosure if applicable.

Does IRAP ban proposals prepared by third-party software or AI?

No published ban. IRAP evaluates merit and completeness of information.

What triggers rejection?

Weak eligibility evidence, inaccuracies, missing disclosures, or false statements.

Closing Thoughts

Federal agencies have already started to deploy GenAI chatbots and advanced analytics to automate internal workflows and improve services.

At the same time, businesses using third-party software or AI to prepare SR&ED tax credit claims or IRAP funding proposals are not violating any known rules.

In a Nutshell

Government AI use: Encouraged (with safeguards) to automate routine internal work across federal organizations.
SR&ED/IRAP and AI: No rule rejects claims because AI or software helped draft them. Content, eligibility, and required disclosures drive outcomes.

If you have any questions or comments, reach out any time.