Experimental Development accounts for over 95% of all SR&ED claims submitted by businesses.
In determining whether the nature of the work performed is eligible, all of the following criteria must be
present in any project:
- The work results in information that produces Scientific or Technological Advancement.
- In achieving the advancement one or more Scientific or Technological Uncertainties must have
been identified and worked on.
- There must be Scientific or Technological content or process in the work undertaken during
Scientific and Technological Advancement occurs when the work is undertaken in order to increase
the existing body of technical knowledge available to the company or industry. Even if a project
fails to achieve the stated objective it may still be eligible if the failure provides new knowledge that
enables the firm to eliminate an option previously considered as a possible way of achieving the
In many manufacturing industries companies are often required to "stretch the capability
envelope" of existing technology to provide greater tolerance needs and general performance
improvements. This can and does result in advancing technologies within the business context of the
firm and more often that not, advancing technologies within the public domain. However where the
solutions to the uncertainties or problems are readily apparent or available in the public domain, the
development would not qualify as an eligible project.
Some typical product or process innovations have characteristics that include:
- A new or improved capability of machine equipment or process which demonstrates technological
- Technologically based advancement which could have applications for other product lines.
Scientific or technological uncertainty may occur in either of two ways:
- Either the firm is uncertain whether the goals can be achieved at all, or
- The firm may be fairly confident that the goals can be achieved but may be uncertain as to which
of several alternatives will either work or be feasible to meet the desired specifications or cost
Attempting to achieve a particular cost or deadline target can at times create a technological
challenge, which may need to be resolved. Thus, technological uncertainties may arise as a result
of the incorporating of these imposed constraints into the factors to be considered. These
constraints are not, by themselves, sufficient to establish eligibility but can act as
"multipliers", by forcing the firm to use or develop new and unproven approaches or designs
that take them "off the standard" path, thus increasing the levels of uncertainty.
Uncertainty could also arise from substituting new materials or components, or adapting a piece of
machinery in order to enable it to be used in ways in which it was not originally designed.
Improvement of existing technologies and methodologies using well established "routine
engineering or routine development" would be ineligible if the outcomes are predictable.
For example, the development of a new product that used only a straightforward design change would not
be an eligible activity. However, if the routine engineering is carried out in support of an
eligible experimental development project, then the activity is eligible.
Routine engineering is defined by CRA as being the practice of providing known engineering
methodologies to achieve desired objectives. If the outcome is reasonably predictable at the
start of the project this may indicate that there is little technical uncertainty present. This
may indicate that that type of work in and of itself would not be eligible.
Some areas in which experimental development takes place include situations when the outcome is
uncertain because the present level of technology is insufficient or where there are compatibility
problems. The work undertaken to resolve this uncertainty should result in a technological
advance, which would cause the activity to become eligible for the SR&ED program.
The definition of system uncertainty indicates that there is recognition that combination of
technologies having fairly well known attributes may require SR&ED if the combinations result in
certain unknowns in terms of how these different components would work together. In other words,
if two or more pieces of machinery are linked together there may be uncertainty as to whether the new
unit will operate as planned.