Plastics Materials, Processing, Equipment & Tool Making Guidance Document

Last update: August 2005

1. Introduction

This document was prepared by a joint Canada Revenue Agency (CRA) - Industry sector committee (a list of the team members is included as Appendix I). Its purpose is to help CRA reviewers and plastics sector claimants, especially new claimants working for small and medium enterprises (SMEs), to navigate the material available to assist with the preparation of an SR&ED claim. It primarily discusses technical issues, and there is no intent to deal with questions related to allowable expenditures or administrative aspects of the program, although, in addressing certain issues these topics will be touched upon. Further assistance on these issues can be obtained through contacting the CRA or from visiting the SR&ED Web site.

For the purposes of this paper, the plastics sector is considered to consist of companies engaged wholly or partly in:

• producing plastic resins or additives (for example reinforcements, colorants, plasticizers, and other property modifiers);
• compounding plastics (mixing the materials to produce a plastic that is ready to be incorporated into a product);
• processing plastic materials into either semi-finished plastic parts or into finished products for sale to consumers;
• recycling and reclaiming waste products; and/or
• manufacturing machinery, equipment and the moulds, tools and dies used to process the plastics.

Companies whose primary activity is in other industry sectors (e.g. automotive, electronic, construction, packaging, agriculture and food processing) can also carry out a significant amount of plastics processing.

1.1 Guidance Documents

This document is one of a series of guidance documents that have been prepared by the CRA working in partnership with industry. They are designed to help with the interpretation of the Income Tax Act (the "Act") and Income Tax Regulations. In addition to using guidance documents, it is important to consult the legislation and regulations for their application in particular situations. The "Act" will prevail in the event of any conflict between the legislation and this document, or with any other guidance documents or information circulars.

Some of the guidance documents are general and apply to all sectors, while others are relevant to specific sectors. The general guidance documents include:

• An Introduction to the Scientific Research and Experimental Development Program (T4052)
• Guide to Supporting Technical Aspects of a Scientific Research and Experimental Development (SR&ED) Claim
• Cross-Sector Shop Floor Guidance Document
• Recognizing Experimental Development

Other documents have been prepared for and by joint CRA / Industry sector committees to clarify issues within these sectors. Those prepared by the Food and Consumer Packaged Goods Sector, the Chemicals sector (Shop Floor SR&ED and Qualifying Work) and the Textile Industry may be of interest.