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Every situation varies and a thorough assessment by our staff would be necessary. However, as a general rule-of-thumb, qualifying activities must meet the Canada Revenue Agency's Three-Legged Stool Test.

The First Leg

Any activity must seek an advancement of technology. The advancement can either be forward and on the leading edge, or it may be a sideways advance - focusing on a solution to a problem which has persisted despite several standard or ad hoc fixes.

The Second Leg

The activity must possess an element of technical uncertainty or risk. If the project can be achieved in time solely by the expenditure of money, then it will likely not qualify.

The Third Leg

The activity should be performed in accordance with the scientific method. The scientific method involves formulating a hypothesis, testing and modifying it using systematic observation, measurement and experimentation. You will need to thoroughly document the activity in order to provide support for your claim.

What Types of Projects Qualify?

To qualify for the SR&ED program, work must advance the understanding of scientific relations or technologies, address scientific or technological uncertainty, and incorporate a systematic investigation by qualified personnel.

Work that qualifies for SR&ED tax credits includes:

• experimental development to achieve technological advancement to create new materials, devices, products, or processes, or improve existing ones
• applied research to advance scientific knowledge with a specific practical application in view
• basic research to advance scientific knowledge without a specific practical application in view
• support work in engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research, but only if the work is commensurate with, and directly supports, the eligible experimental development, or applied or basic research

The following activities are not eligible for benefits under the program:

• social science and humanities research
• commercial production of a new or improved material, device, or product, or the commercial use of a new or improved process
• style changes
• market research or sales promotion
• quality control or routine testing of materials, devices, products, or processes
• routine data collection
• prospecting, exploring, or drilling for or producing minerals, petroleum, or natural gas
• development based solely on design or routine engineering practice