New SR&ED Policies Released By CRA
Written by:
Gerry Fung, Director of Business Development.
The CRA has recently released a new SR&ED policy and procedures document as of December 19, 2012, which will come into effect immediately. Of importance are the new policies affecting the eligibility of work for SR&ED.
The prior information circular (IC86—4R3) described three criterion that are required for SR&ED eligibility: (1) Scientific or technological advancement, (2) Scientific and technological content, and (3) Scientific or technology uncertainty. The new policy document further elaborates on the three criterions, and provides five questions (that have been established by the courts) to provide a logical order for the assessment of SR&ED eligibility:
- Was there a scientific or a technological uncertainty—an uncertainty that could not be removed by standard practice?
- Did the effort involve formulating hypotheses specifically aimed at reducing or eliminating that uncertainty?
- Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypotheses?
- Did the process result in a scientific or a technological advancement?
- Was a record of the hypotheses tested and the results kept as the work progressed?
The policy changes further emphasize the importance of maintaining supporting evidence to substantiate that SR&ED work was performed. Existing SR&ED documentation systems should be re-evaluated to ensure that they adequately capture evidence to comply with the five questions.
There are currently no technical examples provided to illustrate the application of the five questions. However, the CRA has committed to posting draft versions of scientific and technical examples online (for public consultations) later in 2013.
