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  • Writer's pictureCurtis Driedger

Navigating the SR&ED Landscape: Examples of What Qualifies and What Doesn't

navigating SR&ED eligibility through providing conceptual examples of what qualifies and what doesn't

Welcome to our continued exploration of the world of Scientific Research and Experimental Development (SR&ED). In this blog post, we'll be touching on real world examples of SR&ED eligible and ineligible activities, offering insights into what might qualify for the program and what might fall outside its scope. Understanding the nuances of SR&ED eligibility is crucial for claimants engaged in research and development in Canada. Join us as we navigate through examples and scenarios, shedding light on the activities that can earn you Investment Tax Credits (ITCs) and those that may not quite make the cut.

Eligibility Examples:

For SR&ED work to be eligible, the work conducted must have a technical nature via applying scientific principles or methodologies with the goal of overcoming uncertainty for the purposes of achieving scientific or technological advancement.

Put another way, eligibility hinges on the pursuit of conceptual knowledge advancement by delving into the interlocking variables, behaviors, and relationships within a given field. At its core, SR&ED rewards endeavors that push the boundaries of understanding by systematically exploring these intricacies. Eligible projects often involve innovative experiments or investigations aimed at uncovering new insights, whether it's identifying how various factors interact, illuminating the underlying mechanisms governing certain phenomena, or discerning the nuanced relationships between different variables. Eligibility can extend across various domains, including but not limited to computer sciences and information technology, engineering, manufacturing, natural and formal sciences, medical device, health sciences, biotechnology, agricultural sciences, communications, plastics, robotics, mining, and more.

Below are some industry-specific conceptual examples for consideration:

Information Technology and Software Development:

Companies involved in developing software solutions, from startups to established IT firms, often find SR&ED eligibility in the work they do. This includes projects ranging from software applications to system architectures. Eligible projects could include the following:

  • Creating, incorporating or adapting emerging technologies (i.e., machine learning, artificial intelligence, predictive analytics.

  • Developing or optimizing methods or techniques for collecting, organizing, processing, and analyzing big data (i.e., developing data mining algorithms, statistical analysis techniques, or data visualization tools).

  • Cybersecurity (i.e., developing new encryption algorithms, intrusion detection systems, malware analysis tools, or security protocols).

  • Cloud Computing (i.e., developing new methods, algorithms, architectures or micro-services for efficient resource allocation, workload management, security, or cost optimization in cloud environments).

  • Problem-set or platform optimization for advancing performance objectives (i.e., accuracy, speed, efficiency, scale, cost, etc.).

  • Legacy system migration/integration (i.e., integrating disparate legacy systems, applications, or databases to enable seamless communication, data exchange, and interoperability).

Key to the above technology concepts qualifying for SR&ED is that they are required in attempts to resolve some form or element of scientific or technological uncertainty.

Engineering and Manufacturing:

SR&ED can be available to companies engaged in improving engineering and manufacturing processes or developing or incorporating new technologies for various applications. This encompasses a wide range of industries, from aerospace to automotive and beyond. Eligible engineering and manufacturing projects may/could involve one or more of the following:

  • The development of new materials with unique properties or improved performance for specific applications.

  • Design and building prototypes to test new concepts or technologies.

  • Initiatives focused on optimizing manufacturing processes, including the design of innovative machinery or techniques to enhance efficiency and reduce costs.

  • Investigating, incorporating or extending technologies (e.g. sensory, robotics, etc.) into existing systems or processes to achieve improved functionality, performance, or capabilities.

  • Design and development of specialized software tools tailored to address unique requirements.

  • Human/machine interfacing addressing physiological, neurological, and other limitations of the human operator within a servo system.

  • Research endeavors that address scientific uncertainties (e.g. problem/site-specific constraints) in mechanical engineering, electrical engineering, civil engineering, structural design, or environmental engineering, as well as multi-disciplinary engineering projects can also qualify, especially if they contribute to the broader conceptual understanding within these fields.

Life Sciences:

The biotech, pharmaceutical, and medical device industries are prominent players in the SR&ED landscape. Organizations engaged in R&D within these sectors can leverage SR&ED for projects focused on advancing healthcare solutions and medical technologies. Eligible projects may involve research and development in biotechnology, such as the creation of innovative genetic therapies, novel drug formulations, or the development of advanced medical devices. Initiatives aiming to unravel the complexities of biological systems, such as studies in genomics, proteomics, or personalized medicine, can also qualify for SR&ED. Further, projects focused on improving diagnostic technologies, exploring new treatment methodologies, enhancing vaccine development or developing sustainable solutions may meet the program's criteria.

Guiding Questions to Assist in Determining SR&ED Eligible Activities:

To assist in determining SR&ED eligibility, consider asking the following questions which may hint at the occurrence of SR&ED activity:

  • Were experiments, prototyping, or systematic testing required to achieve project objectives?

  • Was an iterative approach utilized during the development cycle to overcome uncertainty?

  • Can the knowledge gained from the project be applied or transferred to other areas within the organization or industry?

  • Does the project involve innovative solutions or advancements beyond standard industry practices?

  • How does the project differ from routine engineering or development activities commonly employed in the industry?

  • Was internal company knowledge or publicly available knowledge insufficient at project outset?

  • Is data being collected and analyzed to more thoroughly understand the underlying mechanisms or behaviors?

  • Did failure occur due to scientific or technological challenges?

  • Was other government support received such as IRAP, ISED, CMF, MIDMTC, Mitacs, or other?

  • Was there collaboration with third-party universities or research institutes?

  • Was proprietary knowledge gained?

  • Did the project or work result in proprietary intellectual property or patents?

Ineligible Activities:

Equally important to identifying eligible SR&ED activities is the ability to differentiate and identify ineligible SR&ED work. While SR&ED encourages innovation and technological advancement, certain activities do not qualify for eligibility. Routine data collection, market research, and commercial production, for instance, fall outside the scope of SR&ED eligibility. Activities aimed at market analysis, sales promotion, or routine testing without an element of technological advancement are also excluded. Similarly, activities primarily focused on style changes, cosmetic modifications, or routine engineering and quality control processes, lacking a core element of scientific or technological uncertainty, do not meet the SR&ED eligibility criteria. It is crucial for businesses to recognize that SR&ED is specifically designed to incentivize projects that contribute to the expansion of scientific knowledge and technological capabilities, and thus, activities driven solely by routine operations or commercial goals do not qualify for this program. Understanding these limitations ensures businesses can effectively delineate eligible R&D efforts from non-qualifying activities when pursuing SR&ED benefits.



Distinguishing between SR&ED eligible and ineligible work is crucial for businesses aiming to optimize their claims for research and development incentives. By examining these concrete examples, you can gain a clearer understanding of what activities align with the program's criteria. Keep innovating, keep experimenting, and let your journey in SR&ED be guided by a well-informed approach to maximize your potential benefits.








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