Scientific Research & Experimental Development (SR&ED) is an important cost recovery tax credit program in Canada. The program’s definition is somewhat different than what most individuals may think of when they hear “R&D”. Many people simply assume that they aren’t eligible because they aren’t doing dedicated laboratory work.
Under the SR&ED program, “R&D” means that you are trying to advance the state of your technology through a systematic approach while overcoming technical challenges. Here are our top 5 scoping questions, in no particular order, to help you determine whether your project is eligible for SR&ED:
- Have you designed or developed new software or systems?
- Have you modified or integrated existing software?
- Have you created a new product, made improvements or added new features to an existing product. Have you built a prototype or proof of concept for a product idea?
- Have you incurred costs related to a process, project or prototype that is incomplete because of unresolved technical problems?
- Have you changed a process to reduce costs or to improve manufacturing capabilities?
These questions are just meant to help you scope a project for SR&ED eligibility. Keep in mind NOT eligible for SR&ED: marketing & sales, routine testing, research in social sciences or humanities, commercial production, style changes, routine data collection, petroleum or natural gas exploration/drilling.
To learn more about what is eligible vs. what isn’t, contact us and we will walk through all of the specific eligibility requirements as well as determine if your development is SR&ED eligible.