Let's Shred!

• Words in bold have exact definitions, and many of these definitions are summarized here in-context. When you see 💩 next to a term, click it to see the agonizing definition on the CRA website.
• The law-man (👮) describes stuff that we need to formally state or prove to the CRA.

Initial Definitions

SR&ED is focussed almost entirely on knowledge, not equipment, people, money, processes, etc.

• Science 💩 Knowledge about stuff other than humans & the humanities.
• Humanities 💩 Culture, values, expression, language, literature, arts, history, and philosophy.
• Technology 💩 The knowledge about the practical application science — how to make the wheel, fire, electricity, nuclear weapons, etc. Also, how scientific facts and principals are embodied in a product or process. Technology is not a physical entity, though there might be physical documents describing it.
• Knowledge Base 💩 Scientific or technological knowledge available either within our company or to the public. In other words, knowledge we can access by drawing on our own past experiences, talking to people, hiring a new employee or consultant, looking in a book or on a website, attending a conference, etc.

When to Claim Scientific Research

You were happily working away on a company project, when you encountered a problem.

• Company Project: A project with commercial/business-motivated goals: developing products, upgrading processes, engineering work, etc.
• Problem: Something that stops you from making further progress. Note that if you "solve" this problem by just changing the requirements of the project or just giving up, you can't claim that as SR&ED work. Obviously. BUT — if you follow the following process, and your experiments don't lead to a useful result, you are allowed to claim that work.

👮 Project name; nature of the problem.

The problem included some scientific or technological uncertainty.

• Scientific or Technological Uncertainty 💩 You don't know how to solve the problem, and it's not part of the knowledge base.

👮 Nature of the uncertainty; how you know it's not in the knowledge base.

In order to overcome the uncertainty, you needed to perform a systematic investigation.

• Systematic Investigation or Search 💩
  1. Define the research project.
  2. Advance a hypothesis.
  3. Plan and then perform tests of the hypothesis with experiments and analysis.
  4. Develop logical conclusions based on the results.
• Research Project: The overall process of performing experiments and analysis to raise your knowledge base so as to overcome the uncertainty in the problem you're facing in your company project. Phew!
• Hypothesis 💩 A hypothetical idea, consistent with known facts, that you'd like to prove or disprove.
• Experiment 💩 Testing one or more hypotheses under controlled conditions. Drawing relationships between tests, revising hypotheses, building prototypes or models, and so forth.
• Analysis 💩 Synthesizing and formally describing the findings of your experiments in writing, models, graphs, stats, tables, formulas, and software. Contrasting your findings against the knowledge base.

👮 You'll need to keep a record of the hypotheses you formed and the experiments you performed, because (according to the CRA) it's not possible to perform a systematic investigation without recording your work as you carry it out. You should show why each major element is required and how it fits into the research project as a whole. You'll need to document the indicators or measures that will be used to determine if the goals of the work are met.

👮 Note that "guess and check" is NOT a valid approach — you must demonstrate that the systematic investigation was indeed systematic, and not just exploring different options looking for which ones worked or didn't work. For SR&ED, you must do work to increase your scientific or technological knowledge base with experimentation and analysis, then use the increased knowledge base to solve your problem. You should answer questions like: Which parameters have been modified? Which variables have you measured? What are the results of the analysis done after the experiments? Have you examined the relationship between the different experiments and results? What have you concluded? How would you describe the link between the results obtained and the hypothesis? What conclusions can you draw from the results of your tests?

👮 If your process was sufficiently systematic, then others should be able to repeat your experiments and find similar results.

The result of your work has led (or will lead) to scientific or technological advancement, related to the scientific or technological uncertainty. Again, if you performed a valid investigation, failed to overcome the uncertainty, but still made an advancement, you can claim the work.

• Scientific or Technological Advancement 💩 The formation of new knowledge that pertains to scientific relations or technology.

👮 You need to demonstrate that your work produced an advancement of the knowledge base.

Additional Notes

This page summarized just one type of SR&ED work — Scientific Research. There are other sorts of work that can be claimed:

• If your company project is basic research 💩, or is otherwise intended for scientific or technological advancement, and not strictly commercial.
• If your work is experimental development 💩 or experimental production 💩.

We also didn't cover what's necessary to actually file a claim — that's complicated!

Other people may have helped by performing work "directly in support" of the hands-on work, and some of their hours may be claimed. Support work does not include: market research, sales promotion, quality control or routine testing on an ongoing basis, social sciences or humanities, ongoing commercial production, commercial production of a new or improved product, commercial use of a new or improved process, style changes (changes that do not affect function), routine data collection

Helpful Info

👮 Here's the assessment that the CRA applies to determine if SR&ED work occurred:

1. Was there a scientific or a technological uncertainty?
2. Did the effort involve formulating hypotheses specifically aimed at reducing or eliminating that uncertainty?
3. Was the overall approach adopted consistent with a systematic investigation or search, including formulating and testing the hypotheses by means of experiment or analysis?
4. Was the overall approach undertaken for the purpose of achieving a scientific or a technological advancement?
5. Was a record of the hypotheses tested and the results kept as the work progressed?