Myth 1: “We haven’t revolutionized the industry.”

The underlying assumption in this myth is that in order to qualify a company must be developing products or processes that are new relative to the industry. A closer examination of the legislation shows that this is not the case. The term ‘Technological Advancement’ refers to an increase in the capabilities of the given product or process.  In this definition, the ‘increase’ is relative the companies existing knowledge base (and capabilities), not the industry’s.  

If the knowledge required to develop the product or process successfully is in the public domain (i.e. trade journals, schools, etc.) then the work cannot be construed as an Advancement for the company but most often, the knowledge required to do so is proprietary (i.e. belonging to a competitor).  The most important consideration in identifying an Advancement is not whether a competitor offers the product or process under consideration but whether or not the knowledge required to do so is readily available in the public domain.  

Myth 2: “The program is only for Research and Development companies.”

The program was established and designed to support the growth of Canadian companies who are developing new products or processes (or improving existing ones).   This can occur in any industry and the vast majority of SR&ED eligible projects occur as part of a commercial project (i.e. a customer request for a custom product). 

Myth 3: “We develop some of our products through trial and error but we don’t really experiment.”

The CRA requires that the development work for a given product or process incorporate a ‘Systematic Investigation’.  There is a fuzzy line between ‘trial-and-error’ and ‘experimentation’ and typically the difference between the two lies in whether or not a company was developing and testing ‘hypotheses’ along the way.   We have found that in most commercial R&D, the hypotheses motivating a given trial/attempt are implicit (often the result of experience) but present nonetheless. 

Myth 4: “The claim process is too complex and isn’t worth our staff’s time.”

We typically ask that our clients view their SR&ED claims (and the revenue stream associated with them) as a customer.   For the vast majority of claimants – when taking the incremental cost (mainly employee time spent in the interview process and SR&ED consulting fees) of preparing a claim - this revenue stream provides them with similar profit margins as their most profitable customers. 

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