CHEMICALS GUIDANCE DOCUMENT #1 - SHOP FLOOR SR&ED

1.  INTRODUCTION

1.1. The purpose of this guidance document is to supplement Information Circular 86-4R3, by clarifying work that lies within the boundaries of SR&ED, and providing specific examples to assist those performing chemical-related SR&ED in the interpretation and practical application of the SR&ED Program.

1.2. Technical considerations in preparing shop floor SR&ED project descriptions constitute the primary focus of this guidance document. Current or capital expenditures and financial review are complementary issues.

1.3. SR&ED claimants should also refer to the Guide to Form T661-T4088 (E) and Interpretation Bulletin IT-151R5 [1] in addition to the relevant sections of the Income Tax Act and its Regulations when they are preparing their SR&ED Project Descriptions and allowable expenditures summaries.

1.4. In numerous circumstances the SR&ED cannot be carried out in a laboratory setting and some or all SR&ED is carried out in a production and/or manufacturing environment. Shop floor SR&ED (see Glossary) involves creating new or improving existing materials, devices, products or processes in a production or manufacturing environment. It usually involves experimental production or experimental process modification carried out either in conjunction or simultaneously with commercial work that is not SR&ED.