In order to take advantage of the Canada Revenue Agency’s (CRA’s) SR&ED tax credit incentives the first thing you must do is determine if you are performing qualified SR&ED work. But how do you know if you’re doing qualified work? You must ask yourself if you are attempting to overcome technological obstacles. Attempting to overcome technological obstacles can lead to attempting technological advancements. Previously we explored the question of what is a technological advancement in the SR&ED program, but this post deals with what is a technological obstacle.
The CRA has recently consolidated its policies and created a SR&ED glossary. The glossary states:
Scientific or technological uncertainty means whether a given result or objective can be achieved or how to achieve it, is not known or determined on the basis of generally available scientific or technological knowledge or experience. This definition encompasses the definition of scientific uncertainty, technological uncertainty and technological obstacle. The only difference is that scientific uncertainty relates to science whereas technological uncertainty and technological obstacle relate to technology.
But what does this actually mean? If we remove some of the clutter in the definition above we can pair the definition of technological obstacle down to:
A technological obstacle is an unachievable objective based on generally available technological knowledge or experience.
Or more simply, if you understand the current state of the art and you want to create something that the current state of the art can’t do then you’re probably attempting to overcome a technological obstacle.
What defines the current state of the art?
The current state of the art can have many different definitions. In scientific research it could be determined by a literature review. In industry it could be determined by the latest technology available as demonstrated by a leading trade show. The point is, that for you to have a technological obstacle you must know what else is available to you, either via the internet, document searches or off-the-shelf. You must know the flaws or limitations with this technology and must be able to define how you’re going to attempt to go above and beyond (even if incrementally) the current limits of known technology.
If you can do this, then you have yourself a technological obstacle. The next step, and will be covered in our next post, is to conduct your work in an experimental and systematic fashion in order to qualify for the SRED program.