SR&ED Guide: 10 Facts You Need To Know!

SR&ED Guide

SR&ED can be two things: a bit complicated, but also very exciting! While there are certainly more than a few ins and outs to know, the prospect of getting money back for all your hard work is just too fantastic an opportunity to waste. That’s why we put together this quick SR&ED guide.

1. There Are 3 Types Of SR&ED

Basic Research

Work undertaken for the advancement of scientific knowledge without a specific practical application in view.

Applied Research

Work undertaken for the advancement of scientific knowledge with a specific practical application in view.

Experimental Development

Work undertaken for the purpose of achieving technological advancement or creating new (or improving existing) materials, devices, products or processes, including incremental improvements.

2. A Lot of Work Is Eligible

As long as it addresses the needs and directly supports basic research, applied research, or experimental development, work that is eligible for a SR&ED claim includes:

  • Engineering 
  • Design
  • Operations research
  • Mathematical analysis
  • Computer programming
  • Data collection
  • Testing
  • Psychological research

3. Some Work Is Not Eligible

Work that is not eligible for a SR&ED claim includes:

  • Market Research or Sales Promotion
  • Quality control or routine testing of materials, devices, products, or processes
  • Research in social sciences or humanities
  • Prospecting, exploring, drilling for, or producing minerals, petroleum, or natural gas
  • The commercial production of a new or improved material, device, or product, or the commercial use of a new or improved process
  • Style changes
  • Routine data collection

4. You Don’t Have To Succeed

The definition of SR&ED clearly states that the purpose of the work must be for achieving scientific or technological advancement. This means that any scientific or technological knowledge gained through your work, even if it fails to meet your objectives, is still valuable. As long as you have advanced the understanding of science or technology, you can make a claim.

5. You Need A Hypothesis

Before starting your work, you need to form a hypothesis. This means generating an idea consistent with known facts, which serves as a starting point for further investigation. It can either be a possible solution to a problem, or a proposed method or approach, as long as it is specifically aimed at reducing uncertainty.

6. Your Hypothesis Can Change

During the course of your work, the idea behind your project may evolve and change over time as a direct result of testing. This is perfectly acceptable!

7. You Need To Warp It All Up

After you finish testing your hypothesis (i.e., potential solution), you need to draw logical conclusions to understand whether your hypothesis resolved or mitigated the uncertainty.

8. Bookkeeping Is Important

Scratch that. Bookkeeping is incredibly important. You need to keep a thorough log of evidence that is generated as the work progresses.

9. There Needs To Be Uncertainty

Whether scientific or technological, there needs to be uncertainty. Can the objective be achieved at all, or what alternatives, paths, routes, approaches, equipment configuration, system architectures, or circuit techniques will enable the goals to be achieved?

10. The 3-Step Process

Systematic investigation is required and consists of three steps:

  1. Formulating one or more hypotheses
  2. Planning and executing testing
  3. Developing logical conclusions bases on the results

For more information about SR&ED guidelines, click here.

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