SR&ED Policy Review Project - December 2012 Update

Date: December 19, 2012

After the Government of Canada tasked the Canada Revenue Agency (CRA) with improving the administration of the Scientific Research and Experimental Development (SR&ED) program, including conducting a comprehensive review of SR&ED policies and procedures, the CRA implemented an SR&ED Policy Review Project. The CRA is pleased to announce the successful completion of this project and to release new, consolidated SR&ED policy documents.

The objectives of the SR&ED Policy Review Project, announced in November 2010, were to consolidate and clarify the SR&ED policy and related guidance documents that were current at that time, and to present the information in a user‑friendly way on the CRA Web site.

Between November 2010 and February 2012, the CRA conducted public consultations on all of the consolidated SR&ED policy documents to make sure that different perspectives and ideas were considered and that the final presentation of the SR&ED policy information would meet the expectations of SR&ED claimants and other stakeholders.

The new format of the SR&ED policy documents will make it easier to update them regularly to reflect legislative changes, or improve understanding through, for instance, additional examples.

We encourage you to explore the new SR&ED Web pages and the consolidated SR&ED policy documents and send us your feedback at

Questions and answers on the consolidated SR&ED policy documents

  1. When do the consolidated policy documents come into effect?

    The consolidated policy documents come into effect immediately upon their release.

  2. Have the policies and procedures changed?

    No. The principles explained in the previous SR&ED publications have not changed. Changes have been made to the text to improve clarity and readability, and the policies have been updated to reflect legislative changes and jurisprudence. In addition, the policy information has been reformatted and restructured to present it in a user-friendly way on the CRA Web site.

  3. What is the difference between the “Eligibility of Work for SR&ED Investment Tax Credits Policy” document and the “IC 86-4R3”?

    In the IC86-4R3, the CRA had described three criteria—scientific or technological advancement, scientific and technical content, and scientific or technological uncertainty—that had to be satisfied for work to be deemed SR&ED.

    In the Eligibility of Work for SR&ED Investment Tax Credits Policy document, using the definition of SR&ED as the starting point, the CRA has based its approach on answering five questions. This approach, established by the courts, essentially supplements how the three criteria are applied by providing a logical order for assessing them. It is important to note that both approaches (the three criteria and the five questions) are equivalent and assess the eligibility of the work in the same way. The following table shows the relationship between the three criteria and the five questions.

    Questions Criteria
    1. Was there a scientific or a technological uncertainty—an uncertainty that could not be removed by standard practice? Scientific or technological uncertainty
    2. Did the effort involve formulating hypotheses specifically aimed at reducing or eliminating that uncertainty? Scientific and technical content
    3. Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypotheses? Scientific and technical content
    4. Did the process result in a scientific or a technological advancement? Scientific or technological advancement
    5. Was a record of the hypotheses tested and the results kept as the work progressed? Scientific and technical content

  4. What is the difference between the consolidated SR&ED policy documents and the previous financial policy documents?

    The topics covered by the consolidated SR&ED policy documents closely match the lines of Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, and should help in preparing a claim. The information related to each policy is also cross-linked to other policies and the glossary of SR&ED terms, where applicable. Also, based on the comments we received during the public consultations, the policy documents have been changed to make them easier to read and to ensure that the information is clear.

  5. Where are the scientific and technical examples?

    The SR&ED scientific and technical examples are being reviewed. Similar to the procedure followed during the consolidation of the SR&ED policy documents, we will post the draft versions of the scientific and technical examples on our Web site in 2013 for public consultations.

  6. Will the consolidated policy documents create a greater burden for supporting evidence?

    No. The requirement for supporting evidence stays the same. It is important to maintain supporting evidence (e.g. information, records, and documentation) to substantiate that the SR&ED work was performed and allowable expenditures have been incurred. Please refer to Appendix 2 of the latest version of the T4088 Guide for information on documentation and other evidence to support an SR&ED claim.

  7. Will the CRA change Form T661 and Guide T4088 because of the release of these documents?

    Yes. In October 2013, the CRA will release a revised Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, and Guide T4088, Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661, to reflect the changes related to the release of these documents and to accommodate the legislative changes coming into effect on January 1, 2014.

  8. Do these documents reflect all the changes made to the SR&ED program that were announced in the 2012 Federal Budget?

    No. Since the budget changes will come into effect on different dates, these documents will continue to be updated at different times in 2013.

  9. What will happen to the previous SR&ED policy documents?

    The previous publications, whose content has been captured in the consolidated SR&ED policy documents, will be archived on the CRA Web site as of December 31, 2012. To make a smooth transition to the new format, the CRA will keep both the previous publications and the consolidated policy documents on the CRA Web site for six months. After that, the previous publications will be removed. All other necessary documents (e.g. claim forms, guides, and brochures) will be retained.
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