Any engineer or computer scientist involved in a project for the development or improvement of a product or process has at his disposal a knowledge base which we will call, to illustrate our point, his “toolbox”. This toolbox includes all his available knowledge including his training or experience, institutional knowledge from the company for which he works, or from other sources such as the internet, consultants and/or suppliers. When carrying out his project, he will have to use this toolbox to solve any problems he may encounter.
Any task in which he uses his knowledge base (his toolbox) is standard practice and is not eligible for SR&ED tax credits. In the event that he comes up against a problem that he cannot solve with his existing tools he would therefore face a technological barrier. The work required to overcome this barrier and possibly resolve the technological problem constitutes the SR&ED project.
Given this technological barrier, the solution to the problem is unknown and uncertain. He will then have to hypothesize solutions, the results of which are uncertain. To validate these hypotheses, he will undertake an analysis or some experimentation. From this analysis or experimentation, he will draw conclusions (has the initial hypothesis been proven valid or not?) And will make recommendations. During this phase of work, the approach must be systematic and documented (issuing a hypothesis, validating this hypothesis by analysis or experimentation, analysis of test results, conclusions). At the end of the project, he will have obtained a technological advancement beyond his initial knowledge base, that is to say that he will have a solution to the problem encountered. If not, he will have acquired additional knowledge id est, he will know which hypotheses do not work).
So we have the three elements of eligibility for the SR&ED tax credit program:
- A technological barrier whose solution is uncertain
- A systematic and documented approach to overcoming this barrier
- Technological advancement from the solution found or additional knowledge acquired
PREMTEC is one of the rare consulting engineering firms in Canada that started out specializing in assisting with the preparation of scientific research and experimental development (SR&ED) tax credit claims. Founded in 1991 and today bringing together a solid team of experienced engineers, scientists and technicians, PREMTEC is immediately recognized as the benchmark in the field of SR&ED tax credit claims in Canada. Since then, at the request of our customers, we have been able to integrate other governmental financial incentives into our offer.