Is Your Work Eligible for the SR&ED Tax Incentive?

It’s crucial to make sure you’re not leaving money on the table when navigating the Scientific Research & Experimental Development (SR&ED) program. Where do you even begin?

Asking yourself these five essential questions now can help you get a good idea of whether the work you’re doing qualifies you for the SR&ED investment tax credits program:

Are Standard Practices Falling Short?

New realities require new solutions. You may have the correct business case for using SR&ED investment tax credits whenever existing scientific or technological knowledge or expertise can’t help you reach a certain goal. That is also true when you are unable to develop a new or enhanced method due to technical flaws or restrictions. In other words, if present knowledge or technology isn’t adequate to the task of solving an issue, the work you perform to create a solution may be qualified for SR&ED.

Does Your Work Reduce or Eliminate Uncertainty?

All innovation is built on the foundation of understanding. Building a hypothesis is hence an important step in resolving scientific or technical ambiguity. To put it another way, your hypothesis is the starting point for your study into proving – or debunking – an idea. When you develop a hypothesis to answer scientific or technical uncertainty, you may be eligible for the SR&ED tax credit.

Is your Disciplined Approach Grounded in the Scientific Method?

The way you approach problem-solving counts.   Your intended strategy must connect the main aspects of the scientific method for your innovation to qualify for SR&ED. Formulating hypotheses to decrease or remove uncertainty, verifying those assumptions through experiments or studies, and drawing logical conclusions based on the results are all part of this process. Your team of certified science, technology, and engineering specialists will need to follow the scientific method every step of the way to qualify for SR&ED tax benefits.

Did Your Process Lead to Scientific or Technological Advancement?

Good information can lead to a deeper understanding. If your effort leads to a greater knowledge of technology or scientific relationships, it can have far-reaching consequences that extend beyond your current project. Even if you don’t get the answer you’re looking for, what you discover along the route may help your work qualify for research and development funding in Canada. That’s because demonstrating why a potential solution might fail can qualify as progress – even if it doesn’t satisfy your project’s initial goals. Rejecting a hypothesis is a step forward because it removes a potential solution.

Are You Keeping Good Records?

To be eligible for SR&ED tax benefits, you must keep detailed records of your hypothesis, testing, and outcomes. Eligibility is based on records that illustrate why each significant step of the process was necessary and how it fits into the overall project. It’s also crucial to be aware of statistics. You’ll have to demonstrate which indications and metrics you employed to assess your work.