The Canada Revenue Agency (CRA) was tasked with improving the administration of the SR&ED program by the Government of Canada. The CRA has recently released a new policy and procedures document as of December 19, 2012, which will come into effect immediately.
As per the policy document, the CRA has based its approach on the eligibility of work for SR&ED ITCs on five questions. This approach, established by the courts, essentially supplements how the three criteria (scientific or technological advancement, scientific and technical content, and scientific or technological uncertainty) are applied by providing a logical order for assessing them. The 5 questions to assess SR&ED eligibility are as follows:
- Was there a scientific or a technological uncertainty—an uncertainty that could not be removed by standard practice?
- Did the effort involve formulating hypotheses specifically aimed at reducing or eliminating that uncertainty?
- Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypotheses?
- Did the process result in a scientific or a technological advancement?
- Was a record of the hypotheses tested and the results kept as the work progressed?
