In two prior posts we discussed what a technological advancement was and what a technological obstacle was. In this post we discuss the third portion of the T661 form that must be filled in to prove SRED eligibility and that’s the work performed section.
The CRA has recently consolidated its policies and regarding work performed they first mention the following:
In SR&ED, it is expected that a planned approach is formulated; that is:
- formulating one or more hypotheses designed to reduce or eliminate the uncertainties;
- planning and executing the testing of the hypotheses by experiment or analysis (may include work on the evolution of prototypes or models); and
- developing logical conclusions based on the results or findings of the experiment or analysis.
and then in a separate section they mention the following:
It is expected that the work be documented, clearly showing why each major element is required and how each fits into the project as a whole. It is also expected that the indicators or measures that will be used to determine if the goals of the work are met will be identified and documented at an early stage of the work. In adopting the scientific method, the progression of work is built on analyzing results from step to step. To build on the results of testing in a systematic way requires the organized documentation of the work undertaken during experimentation or analysis. This is a basis for being able to capture, communicate, and, if necessary, repeat the work leading to the advancement of scientific knowledge or the technological advancement.
So what does this all mean?
In simple terms, the CRA wants to know, how did you do your work. Were you systematic? Did you keep track of your successes and failures? Did you track your tests/experiments and did you improve upon them once you analyzed the data or results? Did you document this process with spreadsheets, pictures, notebooks, computer programs, or otherwise?
Basically the CRA wants to know that you didn’t just throw a bunch of stuff against the wall to see what would stick and then just went with whatever resulted. In the software industry this could be considering hacking and the CRA wants to be sure it isn’t giving out tax credits for hacking through a problem. Rather the CRA wants to see that you thought about your problem, you understood your problem and how others may have tried to solve it, and then you went about solving your problem in a systematic and experimental way.