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14 Keeping a Technology Focus

14 Keeping a Technology Focus

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Published by SRED Unlimited
Bruce Madole explains what the focus of a SR&ED claim should be, and why.
Bruce Madole explains what the focus of a SR&ED claim should be, and why.

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Categories:Types, Brochures
Published by: SRED Unlimited on Dec 01, 2010
Copyright:Attribution Non-commercial

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12/05/2010

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Copyright 2010 Bruce MadoleKeeping a technology focus
Keeping a technology focus
The Canada Revenue Agency (CRA) encourages claimants under the ScientificResearch & Experimental Development (SR&ED) tax incentive program to describe their  project work at a technology level, and with a technology focus (what CRA guidancedocuments sometimes describe as
looking through a
 
technology lens
) because this is thelevel at which SR&ED work must be evaluated.The purpose of the SR&ED program is to encourage technological innovation inCanadian companies, including the pursuit of new technological knowledge. This is done by enabling claimants to identify qualifying project work, and qualifying costs, and thento claim either a tax refund or a tax credit based on those costs.People commonly confuse the business purpose or commercial intent of a projectwith the technology that is used to deliver on that intent, with the result that they end uptalking about what a given project will “do” (such as descriptions of system features andfunctionality.) I have heard a CRA Science Reviewer describe the issue thus: “SR&EDis not about what you do
with
the technology, but what you do
to
the technology.”This error is so prevalent that the term
 functionality
has become a kind of auditor code-speak for “failing to keep a technology focus”. Similarly, the word
commercial 
takes on a purely negative connotation in SRED-speak. This means that you have notonly missed the technology mark, but also, potentially, signals the point at whichtechnological uncertainties have been addressed and “commercial exploitation” hascommenced. (Since commercial use is commonly taken by CRA as a signal of the end of 
This document is the property of Bruce Madole, and is used by permission. All rights are reserved. The opinions expressed herein are personal, created for entertainment andinformation purposes, and are not intended to be relied on in place of professional counsel or advice. No part of this document may be re-used, transmitted or re-transmittedwithout the express prior written consent of the author, who can be contacted at: brucemadole@sympatico.ca 

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