Scientific Research and Experimental Development

(from RC4472)

The definition of "scientific research and experimental development" given in subsection 248(1) of the Canadian  Income Tax Act can be summarized as:
…systematic investigation or search carried out in a field of science or technology by means of experiment or analysis ... to advance scientific knowledge or to achieve technological advancement.

The work must fall into one of the following categories:

• Experimental development – This is the work done to achieve technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes.
• Applied research – This is work done to advance scientific knowledge with a specific practical application in view.
• Basic research – This is work done to advance scientific knowledge without a specific practical application in view.

SR&ED can also include other work that is directly in support of the experimental development, applied research or basic research. This support work includes only the following eight specific types:

• engineering
• design
• operations research
• mathematical analysis
• computer programming
• data collection
• testing
• psychological research

The support work to be claimed must correspond to the needs of the experimental development, applied research or basic research performed.

Certain work is not eligible for benefits under the SR&ED program, including:
market research or sales promotion;

• quality control or routine testing of materials, devices, products or processes;
• research in social sciences or the humanities;
• prospecting, exploring or drilling for, or producing minerals, petroleum or natural gas;
• commercial production of a new or improved material, device or product, or the commercial use of a new or improved process;
• style changes; and
• routine data collection.