Case Study — Mr. B (Toronto Tech Startup Founder): SR&ED Claim + T661 Filing Recovers $215K Refundable OITC + Federal ITC

ByBader A. Chowdry, CPA, CA, LPA

Engagement summary: Toronto SaaS tech startup with 6 full-time engineers filing first-year SR&ED claim covering $500K in qualifying wages and contractor payments. Insight prepared technical narratives with engineering leads, built the cost pool with proxy-method 55% overhead uplift, filed T661 + T2 Schedule 31 + Ontario Schedule 508, and recovered $215K in combined federal refundable ITC + OITC cash refund.

Client archetype

Mr. B is a 31-year-old co-founder of a Toronto-based B2B SaaS company (data-integration platform). Team: 6 engineers, 2 GTM, incorporated as an Ontario CCPC in 2024. 2026 fiscal year: $2.1M revenue, $850K net loss (still in growth phase). Engineering effort during 2026: roughly 60-70% of engineer time on eligible experimental development (custom event-stream pipeline, novel data-deduplication algorithm, distributed cache invalidation mechanism).

The challenge

Mr. B knew SR&ED existed but had never filed. Startup runway: 14 months. A successful SR&ED claim would materially extend runway, but a failed claim would burn 6-8 weeks of engineering leadership time with no return, and a subsequent audit could add months of ongoing distraction. First-time filers face heightened CRA scrutiny under the SR&ED program’s risk-based review model. He needed a claim that would clear a first review cleanly.

Insight Accounting CPA approach

Insight ran a 3-week engagement:

  1. Eligibility triage. Interviewed each of the 6 engineers using the SR&ED 3-question framework: (a) was there technological uncertainty (something not resolvable by routine engineering), (b) was there systematic investigation, (c) was there a technological advancement (or attempt at one). 4 of 6 engineers cleared the framework on multiple projects; 2 were mostly non-SR&ED (product engineering, refactoring). Insight built the SR&ED-eligible time percentage for each engineer per project.
  2. Cost pool build. Applied proxy method (55% overhead uplift on wages) as most efficient for a small tech CCPC. Qualifying wages after time-splits: $370,000. Proxy uplift: $203,500. Contractor payments (offshore dev firm): $65,000 x 80% = $52,000. Total qualifying expenditure pool: $625,500.
  3. Technical narratives. Insight worked with the lead engineers to draft 3 technical project narratives (max 1,400 words each per CRA guidance). Each narrative addressed the 5 required elements: technological uncertainty, hypotheses tested, systematic investigation methodology, evidence, technological advancement obtained (or attempted). Every claim was supported by contemporaneous evidence: git commit history, sprint notes, architecture design docs, code-review threads.
  4. Filing. Federal T661 + T2 Schedule 31 + Ontario Innovation Tax Credit Schedule 508 filed with the T2 return.

    Measurable outcome

    CRA processed the claim without full technical review. Federal refundable ITC (35% CCPC rate on $625,500): $218,925 capped at $500K annual expenditure limit x 35% = $175,000 refundable portion; remaining $125,500 of qualifying spend at 15% federal ITC generated $18,825 non-refundable (carried forward). OITC (8% x $500K under Ontario expenditure limit): $40,000 cash refund. Combined cash refund: $215,000. Ontario R&D Tax Credit ORDTC 3.5%: $17,500 (offsets Ontario corporate tax, carried forward for future use). Total year-1 SR&ED benefit: $232,500. Cash landed in Mr. B’s operating account 4 months after T2 filing. Runway extended by roughly 3 months on the cash refund alone. Insight retained on ongoing annual SR&ED cadence.

    Key facts

    • Qualifying expenditure pool: $625,500 (wages + proxy + contractor).
    • Federal refundable ITC: 35% up to $3M expenditure limit for CCPC.
    • Ontario OITC 2026: 8% refundable.
    • Ontario ORDTC 2026: 3.5% non-refundable.

    — Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA

    Confidentiality: All identifying details anonymized; specifics protected under CPA Ontario Rule of Professional Conduct 208 (Confidentiality). Archetype descriptions are composites illustrative of engagement patterns.

    Disclaimer: Bader A. Chowdry, CPA, CA, LPA is a Licensed Public Accountant regulated by CPA Ontario. Insight Accounting CPA Professional Corporation is a Chartered Professional Accountant firm. This content is general information only and does not constitute professional advice for your specific facts. Confirm current rules and figures with your own advisor before acting.

    About the Author

    Bader A. Chowdry, CPA, CA, LPA is the owner of Insight Accounting CPA Professional Corporation in Mississauga, Ontario. Insight serves owner-managed businesses with $500K–$50M in revenue across professional corporations, medical and dental practices, construction contractors, real estate investors, technology startups, and NPO/charity boards. Bader holds the Licensed Public Accountant designation from CPA Ontario and combines Big Four training with owner-manager specialization. Book a consultation via the intake form.

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