Proxy vs Traditional Method: A Decision Guide
When to choose proxy overhead versus traditional costing — and the documentation each path expects.
6 min read
Choosing between the proxy and traditional methods is one of the most consequential early decisions in a claim. Proxy simplifies overhead but caps how certain costs enter the calculation. Traditional demands more granular tracking and can surface a larger qualified expenditure base when the books support it.
Use proxy when SR&ED work is diffuse across a team and overhead is hard to isolate without heavy allocation models. Prefer traditional when materials, contractors, and directly attributable costs are cleanly coded and material to the claim.
Whichever path you take, document the rationale in the working papers. CRA reviews often ask why a method was selected — a one-paragraph memo written at kickoff is cheaper than reconstructing that logic after a review letter arrives.