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20Full Bore SRED

20Full Bore SRED

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Published by SRED Unlimited
Bruce Madole describes four degrees of SR&ED company savvy, from an early prospective stage to maximized value claims, and what it takes to get to that fourth step.
Bruce Madole describes four degrees of SR&ED company savvy, from an early prospective stage to maximized value claims, and what it takes to get to that fourth step.

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Published by: SRED Unlimited on Dec 28, 2010
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12/29/2010

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Copyright 2010 – Bruce Madole

Full Bore SRED

Full Bore SR&ED When I say full bore SR&ED, I mean an all-out, fully committed effort across your organization. For a company of any size, it requires a paradigm shift, from “prospecting” to “mining”, and a level of process integration that is extremely difficult to achieve. Most companies introduce or launch SR&ED, initially, as a kind of prospecting activity. By this I mean that one or more people are assigned to the task of sifting through the evidence of day to day operations, looking for the glint of some promising work and the evidence to support it. Eventually, if promising work is found, and a few successful claims are made over time, it becomes apparent to the senior leadership that there’s real potential in the SR&ED program. Suddenly, there is an appetite for the development of a formal, extensive and optimized exploitation of the SR&ED opportunity. The challenge now arises – what approaches are best to move forward to full-bore SR&ED exploitation. What are the necessary conditions for success within a large company? If you don’t have a large company, are there any “best practices” that you can still adopt for a small to medium sized business, to avoid later growing pains? A critical distinction exists, and must be maintained, between the body of work that is done to accomplish the objectives of a business project, and the experimental work that is performed (within that project or several projects) specifically to overcome a technological uncertainty or to pursue an incremental technological advancement. The

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 and information 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-transmitted without the express prior written consent of the author, who can be contacted at: brucemadole@sympatico.ca

Copyright 2010 – Bruce Madole

Full Bore SRED

latter is the SR&ED. Then there is the work that is “directly in support”, which is added to the claim. There was a time when the CRA reviewers liked to refer to the concept of SR&ED “nuggets” – the idea that trying to identify that core technological uncertainty or advancement being pursued was like sifting through the gravel of routine work to find the claimable gold within. It was an interesting analogy, and a valuable concept, for educational purposes. The essential fact is that we can’t claim everything, sometimes you can’t claim anything, and the greatest challenge within the SR&ED program lies in trying to get the balance right. I have a theory that successful claimants move through four stages in the evolution of the SR&ED program: 1. Awareness: claiming some of what you should (and gradually, less of what you shouldn’t); making due with existing documentary support, or the lack of it. 2. Effectiveness: Claiming most of what you should, less of what you shouldn’t; documentary evidence varies in quality and scope; starting to make process adjustments to obtain more effective documentary support. 3. Self-compliance: Claiming what you should, almost none of what you shouldn’t; solid evidence in support (both technical and financial); process improvement is a fact of life.

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 and information 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-transmitted without the express prior written consent of the author, who can be contacted at: brucemadole@sympatico.ca

Copyright 2010 – Bruce Madole 4.

Full Bore SRED

Maximized: Claiming what you should, with solid evidence, and tightly integrated process support. Grey areas and marginal prospects are an area for negotiation and dialogue with tax authority.

Reaching this final stage implies that you have organized your efforts and processes to achieve a comprehensive identification, screening, and scoping effort, well integrated, with the technical and financial maturity to claim only the eligible bits. That’s full-bore SR&ED “mining”, and it takes a mature, committed, well-organized and wellsupported effort to get there. ( http://www.sredunlimited.com )

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 and information 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-transmitted without the express prior written consent of the author, who can be contacted at: brucemadole@sympatico.ca

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