10 Examples of SR&ED | SR&ED News!

In an important piece of SR&ED News, the CRA has posted 10 draft examples that illustrate key concepts in the sred examples and lessons craEligibility of Work for SR&ED Investment Tax Credits Policy.  The purpose of the examples is to illustrate and clarify key concepts described in the Eligibility of Work for SR&ED Investment Tax Credits Policy.

Here’s a summary of the SRED examples to help you pick out the most useful and applicable ones to your SRED claim.

The difference between technical problem and technological uncertainty – Example 1:

This example of a pump supplier shows how solving a technical problem is not eligible for SRED, but that solving technological uncertainty is.

It is shown that by fixing a technical problem, the pump supplier demonstrated standard practice.  By experimenting with several failed attempts to change the conditions that created the problem, the pump supplier demonstrated overcoming a technological uncertainty.

The use of established technology in an uncertain situation – Example 2:

This agri-business example shows that technological uncertainties may arise from limitations in the use of current technology.  Although the technology used already existed, since there was no publicly available information on the use of it in this particular application, it qualified as SR&ED to apply the technology to a new situation.

How solving a problem to meet cost targets may qualify for SRED – Example 3:

Although meeting cost targets alone does not qualify for SRED, this example shows that technological uncertainty that arises from the need to avoid using a costly process, could qualify for SRED.

Using standard techniques in a new scenario where the outcome is fairly certain – Example 4:

This greenhouse grower example of SRED not applying shows that applying standard techniques to a new scenario where the results are reasonably expected, does not demonstrate scientific research and experimental development.

Testing a hypothesis – Example 5:

Using a glue producer, this example shows that testing a hypothesis from another scientific discovery and applying it to a manufacturing process is a form of SRED.

The difference between experimental development and trial and error testing – Example 6:

Using a pizza maker as an example, this example shows that by not demonstrating analysis of experimental results, the pizza maker only showed trial and error and not experimental development.  This did not qualify as SRED.

New products are not necessarily SRED eligible – Example 7

Showing the example where a company makes a carrot peeler with a glow-in-the-dark handle, which is a new product, but doesn’t challenge any technological uncertainty.  Whereas when the company redesigns the handle to improve ease of use and has to experiment with manufacturing processes using new plastics, it meets the criteria.

The part of the project involving applied research is the only SRED applicable part – Example 8

This example shows that a hockey stick maker experimented with a new manufacturing process and conducted testing on the first 500 units.  This work counted as SRED, but the subsequent 1500 sticks produced in the project did not.

The same type of work could be considered SRED or not SRED based on whether it is routine work or not. – Example 9

This example shows the work of a lab technologist performing routine data collection which does not apply as SRED and also additional data collection for a SRED project which does apply.

A SRED project may be just a part of a larger company wide project – Example 10

In this electronic component producer example, the producer runs into a problem with the size of one of the components.  The producer contracts the miniaturization of the component to another company.  This part of the project is considered SRED eligible though the entire project is not.

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