No, first SR&ED claims do NOT automatically get audited. This is a common myth, but completely untrue. PhyCo Technologies, a Vancouver-based marine biotech startup, filed its first claim with GrowWise Partners, a Canadian SR&ED consulting firm, and the CRA accepted it as filed in two months, with no review and no follow-up questions. This article celebrates the story of PhyCo and how they received SR&ED funding for their innovative work.
Their experience, at a glance
- First-time SR&ED claimant
- Guided end-to-end, under 5 hours of the team’s time to prepare the claim
- Approved in exactly two months
- No audit, no First-Time Claimant (FTCAS) review, zero follow-up questions
The company
Company: PhyCo Technologies (Vancouver, British Columbia)
Industry: Marine biotech/cleantech
PhyCo had never claimed SR&ED before. Like a lot of first-time claimants, they were a small team deep in their actual research, short on time, unsure whether they even qualified, and quietly worried that their first SR&ED claim would get audited. If that sounds familiar, their story is worth two minutes.
Meet the Innovators
“Do you know humans eat on average a credit card worth of plastic every single week?”
The PhyCo team caught my eye at a pitch competition where I heard their CEO start her pitch with that line. PhyCo is one of those companies you cannot help but root for. The Vancouver-based marine biotech team is taking on the enormous, largely invisible problem of agricultural plastic waste, and they are doing it with seaweed.
Most plastic use is not consumer-facing. It is built into the systems that bring food from farm to table, and agriculture goes through staggering volumes of it every year. PhyCo is replacing it with compostable, carbon-negative bioplastics made from Canadian seaweed, developed in partnership with Indigenous Nations, that perform like petroleum plastic and then break down.
Getting there takes serious science: developing and refining a seaweed biorefinery process, and engineering a material that is watertight, flexible, and durable, yet fully compostable. Led by co-founders Ranah Chavoshi and Dr. Stacey Goldberg, it is exactly the kind of research and development that Canada’s SR&ED program exists to reward.
The challenge
For the first SR&ED claim, SR&ED can feel like a wall. You are not sure whether your work qualifies. You have heard the process is complicated and time-consuming. And you’ve likely heard the rumour that every first-time SR&ED claimant gets audited by the CRA, which you’ve heard can be a nightmare. This might have led you to believe that SR&ED isn’t worth the time, stress or effort to get the funding.
PhyCo had all of those questions, and a small team with no hours to spare. Every hour spent puzzling over a tax credit was an hour not spent in the lab.
That is where we came in. GrowWise helped the PhyCo team understand that SR&ED doesn’t need to be complicated. We helped them understand their eligibility, the process of applying for SR&ED, we explained that over 90% of claims, even first-time claims, get approved without an audit, and we helped them through the whole process.
The turning point
When PhyCo came to GrowWise, the goal was simple: handle the hard parts for them, and get them every dollar they had earned with as little demand on their team as possible.
Our AI-driven technology pulled the evidence from where the work already lived, so the ask on PhyCo’s team stayed small. We filled the gaps with short technical conversations, identified exactly what qualified, and prepared a complete, well-documented claim, all while keeping the total time required from PhyCo to under five hours.
At GrowWise, we are SR&ED experts so that you don’t have to be. You share documents and tell us the story of the work, and we use that information to create the SR&ED claim, written the way the CRA is looking for. PhyCo let us be the SR&ED experts, and they are the bioplastics experts.
Do all first-time claimants get audited?
No – it is not a guarantee that if you are a first-time SR&ED claimant, your SR&ED claim will automatically get audited. This is the fear that stops so many companies from claiming at all, so it is worth addressing head-on: no, being a first-time claimant does not mean you are destined for an SR&ED audit.
PhyCo’s claim is a great example. From submission to approval, it took exactly two months. There was no audit. There was no First-Time Claimant Advisory Service review. There was not a single follow-up question from the CRA. Their first SR&ED claim ever submitted was approved and accepted as filed without review or audit.
It is also worth knowing how the CRA actually handles most first-time claims these days, because the reality is far less scary than the rumour. Rather than auditing first-timers, the CRA has increasingly moved toward a program called the First-Time Claimant Advisory Service (FTCAS). If the CRA has questions about a first claim, they are now more likely to do an FTCAS than a full audit.
And despite the name, an FTCAS is not something to dread. It is a two-hour meeting where the CRA walks you through how the SR&ED program works and asks a few questions about your projects. It is genuinely helpful and ends with your claim approved as filed, meaning you get your full refund. In other words, even the “harder” path for a first-time claimant is an educational session with the CRA, not an audit. More info on the FTCAS process here.
Many first-time claimants, PhyCo included, avoid even the FTCAS and the SR&ED claims are simply accepted as filed. The fact that the PhyCo claim was approved without review is not an accident, but it is also not a promise we can make for every claim. The CRA does select high-risk or very large claims for review, in which case we support our clients throughout the whole review process at no extra cost. More info on SR&ED audit triggers here.
PhyCo having their first claim accepted as filed is the result of a clear, complete, well-prepared claim that only includes genuinely eligible work and documents it properly. A good claim is built to hold up on its own, so that if the CRA ever does look closely, there is nothing to untangle.
Tying to Figure Out SR&ED Alone | Working with GrowWise | |
Your team’s time | 30+ hours you do not have | Under 5 hours |
Knowing what qualifies | AI-assisted guesswork | Expert-led and thorough |
The audit worry | “Will we get flagged?” | 98% of claimed dollars received |
The experience | Overwhelming | Guided every step |
The results
PhyCo’s first SR&ED claim was approved in exactly two months, with no audit, no First-Time Claimant review, and no follow-up questions, and it took less than five hours of their team’s time to prepare. That is non-dilutive funding flowing straight back into their research, with almost none of the friction first-time claimants expect.
GrowWise treats SR&ED as a year-round partnership. We work with the companies we support throughout the year, so the team always understands how SR&ED fits alongside other grant programs and what to track. We capture projects as they happen, so the year-end process stays simple and gets easier every year.
If PhyCo’s story sounds like yours
If you have been putting off SR&ED because you are not sure you qualify, you do not have the time, or you are worried a first-time claim invites an audit, PhyCo’s experience is worth remembering. It does not have to be hard, and being a first-timer does not mean trouble is coming.
At GrowWise, we work with companies across all industries and sizes, and our goal is to make SR&ED simple. Our process takes, on average, under five hours of your team’s total time to prepare the entire claim.
We would love to help you fund your innovation the way we helped PhyCo fund theirs.
Curious how GrowWise could make your first SR&ED claim simple? Book a free consultation today.
PhyCo Technologies is a Vancouver-based marine biotech company turning Canadian seaweed into compostable bioplastics for agriculture, developed in partnership with Indigenous Nations. Learn more at phyco.ca.
