In a small business, or a start-up with just a handful of people working like mad to get the business going and the products or services developed, the levels of reporting and documentation are almost nil. People talk to each other – they don’t generally write notes and reports. If there’s a boss to report…
DetailsDid you know that even a daily “to do” list, with technical details included on it, could make a critical difference to enable you to claim SR&ED? In fact, the current approach to evidence for SR&ED looks as though it may unreasonably deny many small businesses proper access to the SR&ED tax incentives. It’s unfortunate,…
DetailsYou need to be prepared to frame or limit the due diligence discussion by creating and keeping clear evidence about the work you do – from the due diligence work to the point at which you actually begin experimental development, including notes about the framing of your technical hypothesis, various approaches considered, and so on.…
DetailsYou may have heard someone from the Canada Revenue Agency (CRA) speak about “due diligence”, and wondered what they meant by that? The answer is – they probably mean more by it than you would like. You may have noticed that a lot of the SR&ED program hangs on the meaning of various expressions, such…
DetailsIf you are already intent on claiming SR&ED for some project work, and know this from the outset, you would be well advised, from a SR&ED perspective, to adopt more SR&ED-friendly payment terms, such as time-and-materials, with which the risk is clearly yours. When you think about it, the ability to claim SR&ED is itself…
DetailsDid you know that having your development work done for you under a fixed price or “hard ceiling” arrangement can be fatal to your prospects for a SR&ED claim? It’s true. This is because the tax authorities look at the “ownership of risk” as one of the critical tests of who is entitled to claim…
DetailsImagine a baseball game, where the pitcher throws the ball, then runs to home plate in time to catch it, and then, if the ball is hit, has to run out into the field and catch the ball or field it, and then throw it to himself at one of the bases in time to…
DetailsBuilding a SR&ED process has to include a moment of discovery – that process is almost the perfect opposite of individual effort. I knew that – I had spent years documenting and working with other people’s processes. What I had forgotten, and had to relearn, was the extent to which personal involvement can cloud your…
DetailsTo use the simplest example: a hammer is the technology, and “hitting nails” (or thumbs) is the functionality. If you were talking about a complex computer system or network, it would be necessary to look at the technical building blocks used to assemble the system – combinations of hardware and software – and the interactions…
DetailsThe Canada Revenue Agency (CRA) encourages claimants under the Scientific Research & Experimental Development (SR&ED) tax incentive program to describe their project work at a technology level, and with a technology focus (what CRA guidance documents sometimes describe as looking through a technology lens) because this is the level at which SR&ED work must be…
DetailsIn the Scientific Research & Experimental Development (SR&ED) tax incentive program, the pursuit of a technological advancement (TA) is about the attempt to gain some small, incremental improvement in the face of technological uncertainty, outside the boundaries of known or standard approaches, and through experimental means. It’s about taking baby steps, and seeking small gains…
DetailsSometimes a claim is just too small, too weak, or too poorly supported to be worth the effort and cost of pursuing it. Occasionally, however, a small claim represents an opportunity that it could cost you dearly to overlook. When is a small claim not too small? When it’s a seed project. Every claim has…
DetailsOf course, no discussion of TA would be complete without talking about “novelty”. Novelty is what the Canada Revenue Agency (CRA) refers to when we make an argument that a certain chunk of work must be a technological advancement because that work entailed doing something that has never been done or attempted before. The first…
DetailsProject complexity does not equate to technological uncertainty, nor does overcoming complexity translate to technological advancement. I’ve learned this from hard experience, and I will share why. . From time to time, a company will find themselves wishing to claim work from a project that was very large and extremely complex. Often, such projects may…
DetailsPerhaps you are familiar with the phrase “the sound of one hand clapping”. It’s all very mysterious and evocative. I’m not particularly mystical or meditative, but I’m going to use this phrase in a discussion of two opposite extremes in the preparation of an SR&ED claim. My thesis is simple — an SR&ED claim needs…
DetailsAs I discussed in the previous post, these processes need to be extremely lightweight, because most companies are in the “business” business, which is to say, manufacturing, or computer programming, or tool and die work, etc., or whatever business they happen to be in. SR&ED is supposed to help by mitigating the costs of technical…
DetailsThis article talks about SR&ED process thinking, first by examining the concept and characteristics of a framework for pursuing SR&ED, and then, secondly, by reflecting on the processes that might be needed as a part of such a framework. I think a spider web is a useful paradigm for building SR&ED-supportive processes within your company.…
DetailsThe Canada Revenue Agency (CRA) occasionally speaks about SR&ED claimants achieving a state which CRA calls “self-compliant”. On the surface, it seems like a reasonable goal – a claimant should have reached a level of sophistication, about the SR&ED program, which enables them to claim only what should be claimed, and presumably, never to claim…
DetailsSome claims just aren’t that strong. Claims may be weak for a wide number of reasons – lack of clear technological uncertainty or technological advancements being sought, lack of evidence (or even a strong case) for experimental development, or even financial costs not commensurate with the core science. Whatever the weaknesses, it is also true…
DetailsThere’s an old non-joke about the recipe for elephant stew that read: “take one elephant – cube it.” Not all that funny – but we can imagine the effort involved in cutting up an elephant into little cubes of stew. It would be discouraging – about as discouraging as the effort to review one of…
DetailsWhen I was a very little boy, the very last bed-time story my Father would tell me went like this: “Once upon a time … the end”. That’s when I knew that I had reached the limits of his patience for telling stories (and putting off bed-time in the process). In a very real sense,…
DetailsI have a theory about the documentary evidence required to support SR&ED claims, and it is this: if you want your work processes to create evidence that you are doing SR&ED, then you will have to tweak and evolve the processes themselves so that they include what I call the “SR&ED facts”. I’m talking about…
Details“Normally, when faced with this kind of problem, I would …” This is an example of a statement that might be made by any experienced person, about a technical problem. Someone, that is, who actually knows what “normal” is, and who is experienced enough, and perceptive enough, to recognize that “this isn’t normal”. Such a…
DetailsIf you’re trying to improve your products, services or technical processes, or even trying to develop new ones, you need to be aware of the “Experimental Development” part of the Scientific Research and Experimental Development (SR&ED) tax incentive program. Don’t let the Scientific Research (SR) part of the program discourage you or throw you off…
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