3 Steps to Better Documentation of SR&ED in Trello

Trello SRED Documentation issues board.png

At ENTAX, many of our software-based clients use Trello for its flexibility and adaptability to multiple Agile processes. If you currently use—or have thought about using—Trello, then you’ve come to the right place, otherwise, consider other articles in our series, here:

 

Trello is a system of “project boards with superpowered post-it notes”. A beautifully simple system for keeping notes, Trello functions extremely well for Kanban or Getting-Things-Done task management systems. The software offers an easy-to-learn and highly intuitive interface, its laser focus on simplicity and flexibility can dramatically reduce administrative overhead, but those same strengths can easily become liabilities when used as the basis of your SR&ED claim. We want to ensure that your SR&ED claim is as defensible as possible without over complicating your approach to Trello project management, so we’ve compiled a few tips and tricks for companies who heavily leverage Trello to help them identify, separate, and contextualize their work for improved SR&ED documentation compliance.

 

To comply with CRA policy requirements for SR&ED, you must prove that you applied a logical, systematic approach (NOT trial-and-error) to problem-solving in the course of experimental development. Be mindful of the fact that this program is all about incentivizing and rewarding activities with a risk of failure in an attempt to advance a science or technology field, rather than the outcome of the effort, therefore it is largely irrelevant whether or not you ultimately succeeded in that effort. In the eyes of the CRA, the closer your R&D processes align with the scientific method (question, hypothesis, test, analysis), the stronger your overall SR&ED claim. In the spirit of the scientific method‒which demands carefully maintained and updated records (for reproducibility of experiments, knowledge transfer)‒a strong SR&ED claim is backed up by documentation of a contemporaneous nature i.e. recorded at the time the work took place, NOT generated retroactively. Documentation that complies with SR&ED requirements should communicate who was involved in what work, when work was performed, how that work was carried out, and relate the work back to a science or technology objective, in order to explain why that work was necessary to overcome a scientific/technological uncertainty.

 

If you primarily use Trello to track your project work, it will most likely be leveraged not only to corroborate the science/technology narrative articulated in the technical report abstract submitted alongside your SR&ED claim, but also to establish the material scope and extent of your claim (i.e. qualified expenditures). If your SR&ED claim gets selected for audit, the CRA will be looking at your Trello boards (or an export thereof) to determine both the eligibility and extent of work performed. This means they may potentially be sifting through hundreds or thousands of cards created over the course of an entire tax year. For all its simplicity and flexibility when dealing with active tasks, it is not always easy to review the work you completed several years ago and small differences in how you’ve organized, tracked, and labelled your work may have a dramatic impact on the outcome of an audit. To maximize the likelihood of getting your SR&ED claim approved, Trello boards, lists and cards should altogether clearly communicate:

 

  1. Who was involved (board members)
  2. What work was performed in an attempt to resolve said issue (card descriptions, comments)
  3. When the work was performed
  4. How the work was carried out (card description, comments)
  5. Why the work contributes to the aspirational pursuit of some science/technology advancement

 

Keep reading below for our 3 Common issues and suggestions on how to better document SR&ED in Trello...

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...Extremely technically knowledgeable ...able to identify and extract SR&ED eligible work from large statements of work in a short period of time. As a result, we were able to claim significant amount of tax credits through Ryan and his team's SR&ED efforts. I would not hesitate to recommend him to anyone looking for SR&ED help
D.Chiang, Manager - Finance, Boeing Canada (Aeroinfo Systems)

 

Here are 3 common issues with Trello as a documenting system, and our suggestions that will dramatically improve your ability to claim SR&ED using Trello boards as SR&ED evidence:

 

1. Use board/list titles to denote end-to-end work iterations

The single biggest problem we see when using Trello to justify a SR&ED claim is in tracking when a piece of work was done and the archive features responsible for most of these issues. While the archive is great for individual users and very small teams it was never intended to replace dedicated time tracking systems. After your first few hundred cards have been sent to the board archive, any attempt to refer back to historical work starts to resemble a needle-in-the-haystack scenario. It’s hard enough to do a review when it’s your own work, so an external auditor trying to determine important temporal information like when your SR&ED project started, what the first hypothesis you had was, or how long you spent trying to overcome a technological obstacle will be completely lost. Since much of the key information present in Trello, like card created date, timestamps associated with comments, or any timing information other than ‘Due Date’ cannot be searched for, it’s hard or impossible to definitively determine what year a given task was done in, let alone to derive a clear and unambiguous project timeline. This information is required in order to establish the extent of eligible work performed, so if you don’t have a good way to prove key times like project start date, end date, and when your technological obstacle was first discovered, your claim may be rejected for lack of evidence that SR&ED took place within a tax year.

 

In order to see SR&ED success you will need a way to associate each of your cards with a period of time. To this end, we suggest that you create a new board to use as archive. This board should have lists corresponding to weeks, months, sprints, or some other meaningful set period of time that represents an end-to-end development iteration. For instance, if you adhere to agile methodology, then naming your lists “2018 sprint {1, 2, 3,...}” and appropriately bucketing your cards into their respective sprints allows for easy auditability from a time tracking perspective. Then later, instead of hitting the archive button and immediately losing your issues to a difficult-to-search archive, you simply move your cards (or cut and paste them) out of their original board and into this archive. This means that your SR&ED reviewer can go to a single board and easily see what was worked on without any confusion as to when that work was performed without having to guess at the right title, keyword or comment text to search for and hoping that the card’s ‘Due Date’ reflects its place on a project’s timeline.

 

2. Improve your time tracking precision & granularity in tasks

Wages make up the bulk of expenses in a typical SR&ED claim especially for software development companies. If you are a CPCC and eligible for refundable tax credits, you can recover up to 64% of employee wages for the individuals directly involved in SR&ED work, meaning that evidence supporting your wage allocation is often the most important kind of evidence. To ensure your SR&ED success, you need to show who was working on a given task, and when that work started/ended.

 

As we mentioned above, the only (searchable) time information associated with a Trello card is its Due Date. Time estimates using just this meager information will almost certainly be rejected by a CRA reviewer, especially if your cards lack assigned members (or if you have multiple members assigned per card without any way to split time up appropriately). The above tip will help with this a little, allowing per-period time estimates, but it’s still a far cry from a proper time-tracking system that is compliant with SR&ED policy, and may result in a heavy reduction of claimable expenses.

 

The simplest way to shore up your time-tracking is to maintain a separate system of timesheets or time-estimates in parallel with your Trello project management process. Alternatively, you may choose to integrate Trello with third party time-tracking apps or use custom Power-Ups. For instance, Plusfortrello is a completely free, open source solution for tracking time, generating reports and charts, applying filters, and even supporting offline use of Trello. For a more professional solution you could use Everhour or Harvest, dedicated time-tracking services with an enterprise-level set of features and capabilities.

 

If you happen to subscribe to Trello Business Class or Enterprise, we highly recommend using the officially supported Custom Fields” Power-Up to input specific start and end dates to cards. Note that while this Power-Up is available in all versions of Trello, you can only export information recorded in Custom Fields if you have the aforementioned paid versions, thus its auditing utility is marginal in the free version.

 

3. Use more organizational layers to separate SR&ED from routine

SR&ED claimants need to be able to clearly identify and articulate which tasks are commensurate with the needs, and directly in support, of your SR&ED work, per CRA guidelines. In practice, the CRA requires claimants to demonstrate their knowledge of the program by being able to clearly distinguish and separate eligible work from ineligible work at sufficient levels of granularity, as their expectation is that only a subset of activities within projects constitutes SR&ED. Depending on how you’ve set up your Trello, this may not be very easy.

 

Trello provides three levels of organization: boards, lists, and cards, but many users only use the latter two. Avoiding boards cuts your ability to organize your work by a third, leaving you with a very limited system, where routine tasks and SR&ED work get mixed up. It’s important to demonstrate to the CRA that you have logically separated the two. Rather than trying to manage an entire project inside of a list, step back a level, create a new board, and use the newfound legroom to help organize better. Since boards will in all likelihood contain a variable intermix of both SR&ED and non-SR&ED work at the list level, we highly recommend you employ custom labels (e.g. ‘SR&ED’ or ‘experimental’) to flag suspected or likely SR&ED eligible work at the card level, such that the aggregate body of possibly SR&ED tasks can be easily filtered out for auditor scrutiny after tax year end.

 

It’s also important to be able to distinguish work that’s in support of a SR&ED project, but which on its own might seem routine, from work that’s totally ineligible. In most claims core SR&ED work makes up only a portion of the labour, the rest includes all of the little tasks which on their own don’t seem very experimental but were still required for the SR&ED to proceed. If this support work isn’t linked to core SR&ED work, you risk an auditor assessing and conflating eligible work with routine development, resulting in a reduction of your pool of eligible expenditures. If 3 layers of organization (boards, lists, cards) is not enough to accomplish a clear separation you can also make use of checklists within a card to identify subtasks or dependencies, leaving no confusion about what was required to achieve your technological advancement, and what was ordinary, everyday work. If that’s still not enough for your needs, you may want to consider moving to a more fully-featured task tracker such as Jira.

 

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Contact us  to learn more about how we can help your software company claim and optimize SR&ED. With our deep understanding of SR&ED in Agile Software environments and with market-leading software tools like SREDtrak for JIRA and SREDbot for Slack, ENTAX can help you reach your SR&ED objectives. 

ENTAX is a Research & Development advisory firm for technology companies. We specialize in Scientific Research and Experimental Development (SR&ED) tax credits and other Government incentives across all industries for companies large and small. We provide a full scope of SR&ED tax credit and incentive advisory services and provide the highest quality service. Our goal is to build long term, positive client relationships and with our Government agency partners.

 

Ryan did excellent work for Aquatic Informatics. He provided valuable insight into the process, great advice on technical details and delivered reliable follow-through. I would strongly recommend Ryan and hope to work with him again in the future.
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