SR&ED Clarification For The Automotive Industry (1991)
At SREDucation, we’re taking the time to document all of the changes that have occurred to the SR&ED program over the years. In our “From the Archives” series, you’ll be able to see how the program has evolved since it’s inception in 1986. For a timeline of these events, check out the SR&ED Tax Credit page on Facebook. Stay current with the program by understanding the historical context.
Automotive industry receives clarification regarding SR&ED
In June of 1991, the CRA published a supplement to the 86-4R2 Information Circular to assist in clarifying certain aspects of the SR&ED program in regards to the automotive industry. Since the automotive industry is known to rely on new technologies and new methodologies to succeed in such a competitive market, the automotive industry is eligible for SR&ED credits in sectors where it meets the specific criteria of SR&ED project eligibility.
What SR&ED activities are covered in the automotive industry?
Within the supplement, the CRA clarifies its position by stating that:
- “(a)ll of the experimental and analytical activities associated with the search to resolve the technological problems relating to SR&ED in the automotive sector are part of the envelope of SR&ED, when undertaken in support of basic research, applied research, and experimental development” 
- “(…) direct support activities concerning engineering or design, operations research, mathematical analysis or computer programming, and psychological research”
- “(…) data collection and testing commensurate with the needs of the experimental development and resolution of the problem”
The CRA further details the special issues that can be found within the automotive industry and clarifies its position on such topics as prototypes and pilots plants.
This article is based upon a Government of Canada news release issued at the time, visible here.