SR&ED Mistake: Project Description Misses the Point

I have read a lot of project descriptions written by others that describe the company history, the business project, why the project will impact the company or the market, revolutionize an industry, be good for the environment, and any number of other benefits. All of this is irrelevant to SR&ED. But do not despair, SR&ED-eligible projects can certainly have some or all of the above benefits.

There are only three things to focus on in a SR&ED report, and the tax form has a separate section for each:

1. technological uncertainty (or technological gap)
2. The experimentation to try and overcome the technological uncertainty (or close the gap)
3. The advancements – what you learned and what improved capacity, if any, your technology accrued.

I’ve seen project descriptions that boil down to “our technology needed to do X. Our hypothesis was that we could get it to do X. We were successful, and here is how it works. We advanced technology by getting X to work.”

The above SR&ED plot does not say a thing that the CRA wants to know about. They want to know what the technological gap was, why current technology was insufficient for the project requirements; they want to know the mistakes you made when you tried to close the gap; and they wanted to know what you learned including the reason certain attempts failed and what insight led to the success if you had success.

#Business #SR&ED #sred

Read More