ON THE SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT (SR&ED) PROGRAM

ON THE

SCIENTIFIC RESEARCH AND 

EXPERIMENTAL 

DEVELOPMENT (SR&ED) 

PROGRAM

SR&ED PROGRAM

Federal program run by Canada Revenue Agency (CRA) to encourage innovation

General Definition of SR&ED work:

“A

technical problem

that causes

skilled workers to undertake a

scientific investigation

in order to

OBJECTIVES: TO EXPLAIN…

Why does the SR&ED program exist ? Who does SR&ED apply to ?

What is SR&ED-eligible work ? How does SR&ED apply to you ?

SR&ED OVERVIEW

Pronounced “shred”

Billions disbursed per year

In Ontario, up to 68 cents refunded for every dollar spent by eligible companies on eligible work

WHY DOES SR&ED EXIST?

Encourage companies to take risks in developing new technology

Increase Canada’s competitive edge

Thereby stimulate external investment in Canada

WHO DOES SR&ED APPLY TO ?

Anyone interested in the cash flow of your company ☺

Companies doing eligible work (advancing technology in some way)

WHAT IS NOT “SR&ED”?

Sales and Marketing

Research in the Social Sciences or Humanities Aesthetic changes

Routine data collection

It is NOT the overall purpose of the activity or

project, but rather what is actually occurring at a technical level

* If a project has no technical uncertainty but only Economic/Financial uncertainty, it is not SR&ED eligible

WHAT IS SR&ED - TECHNICAL

REQUIREMENTS

Each project must demonstrate 3 criteria:

y Scientific or Technological Uncertainty y Scientific or Technological Advancement

y Scientific or Technological Content (Systematic Investigation)

TECHNOLOGICAL UNCERTAINTY

Whether or not a given result or objective can be achieved, and/or how to achieve it is not known or determined on the basis of

generally available scientific knowledge or experience

Criteria applies equally to work on new or existing processes or products

Financial or economic risk is not an uncertainty

TECHNOLOGICAL UNCERTAINTY

Obstacles in process/product development Not found in the public domain

Key words: problems, barriers, unknowns, difficulties, limitations ~when things go wrong!

TECHNOLOGICAL ADVANCEMENT

Activity generates information that advances your understanding of scientific relations or technologies

Starts from a declared technological base of knowledge

Applicable beyond the specific situation in which the discovery was made

Brings new knowledge to claimant which had not been generally available to them in the base

TECHNOLOGICAL ADVANCEMENT

Result of the technical work

Increases the technical knowledge

Key words: innovation, evolution, achieving goals, new capabilities

TECHNICAL CONTENT

The activity must incorporate a systematic

investigation going from hypothesis formulation, through testing by experimentation or analysis, to the statement of logical conclusions.

Includes work on the evolution of prototypes or models.

TECHNICAL CONTENT

Work was actually…. Er, performed ! Qualified people did it

Key words: testing, analysis, plant trials, pilot runs, laboratory experiments, investigation,

engineering, prototypes~what technical people did

SR&ED MODEL

Uncertainty or

Challenge

Knowledge Base

SR&ED MODEL (CONT’D)

SR&ED Work

AREAS OF ELIGIBILITY

New Product Development New Process Development

Incremental improvement to existing products, materials, etc.

KEY CONSIDERATIONS

It is NOT the overall purpose of the activity or

project, but rather what is actually occurring at a technical level

* If a project has no technical uncertainty but only Economic/Financial uncertainty, it is not SR&ED eligible

WILL YOUR WORK QUALIFY?

You may be eligible if you:

Tried to overcome one or more new and unexpected technological problems

Conduct trials, experiments, or analysis to solve these problems

Require experience or technologies not commonly available to your company to solve these

problems

Work will result in a tech. Advance in your industry or field (even if unsuccessful)

QUESTIONS TO ASK YOURSELF

Is time being spent developing new ways of doing things?

Is time being spent adapting processes before saleable products are being produced?

Are you consistently producing different types of products requiring staff to always change the

way they do things?

Are significant amounts of scrap being generated?

QUESTIONS TO ASK YOURSELF

Are production costs exceeding budgeted targets because you have to deal with unexpected

production related problems?

Has the company applied for or been approved for a patent?

WHAT TO TRACK?

Hours, hours, hours!!!!

Activities undertaken by technical staff

y Work performed y Test results

Material costs incurred on projects

Subcontractor costs incurred on the projects Any capital items

DOCUMENTATION

Important to identify and track projects

as they happen

Create separate project files/folders

Existing job/time tracking system

Pictures/video of scrapped materials,

prototypes

Technical notebooks

Emails, meeting minutes, project notes

Reports, models, prototypes, test results

WHAT WE NEED TO DO

In order to Maximize the SR&ED tax credits Create a project structure – identifying and tracking projects

Document action plans, work, results, progress and conclusions

SUMMARY

3 Criteria:

y

Uncertainty, Advancement,

Content

Projects with numerous challenges

Gained knowledge applicable beyond project Remember the R&D model

BY THE WAY… WHO IS BENEFACT,

AND WHAT DO WE DO ?

In business for over 6 years

30-person firm serving all of Ontario

Hundreds of claims filed per year in software, industrial manufacturing/automation, and life sciences

TELL ME AGAIN.... WHAT IS

SR&ED-ELIGIBLE WORK?

Basic Research: work to advance scientific

knowledge without a specific practical application

Applied Research: work to advance scientific

knowledge with a specific practical application in view

Experimental Development: technological

advancement to create or improve something

HOW DO I KNOW IF MY COMPANY IS

DOING SR&ED WORK ?

Knowledge Base Technological

Obstacle

Before the start of the

project, what was your base knowledge level?

What was the existing process before the

introduction of your new process/product?

What were the limitations or deficiencies of your existing process/product?

What was difficult or non-routine about the work?

HOW DO I KNOW IF MY COMPANY IS

DOING SR&ED WORK ?

Knowledge Base Technological Obstacle Systematic Investigation Experiment & Analysis

Did you have a technical or technological obstacle (a problem !)

Is/was there public domain knowledge to solve the problem? Could you think of different approaches to take in solving the problem?

REAL LIFE SR&ED EXAMPLES

Developing a new cultivar

Integrating AJAX and FLASH for a web-based molecular visualization application

Solving performance problems of an existing client-server GIS application (increasing

throughput or scalability)

Find a novel way to more rapidly and painlessly administer a drug to livestock

Modifying a feed screw to increase delivery volumes while maintaining product

HOW DOES SR&ED WORK IN

PRACTICE ?

You obtain your refund by submitting a claim Claim = Technical Report + form T661 and supporting documentation