Copyright 2010 – Bruce MadoleDue Diligenceis the road leading up to the uncharted wilderness of technological uncertainty.
is not SR&ED – it is the preparation for SR&ED. Technological uncertainty, inturn, is seen as a problem, barrier or obstacle, the dimensions of which you have alreadytried to clarify through standard practice and professional disciplines, to the point whereyou can truly say “I don’t know how (best) to solve this problem.” (This is the point fromwhich your SR&ED journey is expected to begin by means of “experimentaldevelopment”.)In this scenario, “
” has progressed to “
uncertainty about how to
”. (There is a good reason why the phrase “know-how” keeps turning up invarious CRA guidance and policy papers.) Due diligence according to the CRA includesa lot of the work you would do around exploring or scoping a technical problem, and if the work that you are doing resembles standard or routine practice more than it doesexperimentation or experimental development, then
is what they will callthat work. Your SR&ED claim will be reduced accordingly.. You need to be prepared to frame or limit the
discussion bycreating and keeping clear evidence about the work you do – from the
work to the point at which you actually begin experimental development, including notes aboutthe framing of your technical hypothesis, various approaches considered, and so on.Failing to keep good evidence of the SR&ED work may allow CRA to expand the scopeof what they describe as due diligence beyond what seems reasonable to you. Thedefinition of
itself is elastic – it expands up to the limits imposed by actualevidence of SR&ED.