What is the Purpose of SR&ED Work?

Filling out Line 620 and Line 622 is necessary to indicate what you are claiming for SR&ED: basic or applied research, or technological development. In the CRA’s definition of SR&ED, basic research, applied research and technological development are separate. Select the one that best reflects the work performed in the reported year.

While it may seem that your project included both, try to only pick one. However – which one “best reflects your project work”?1 This post outlines the difference between the two.

Line 620: Basic or applied research

Basic research advances the scientific knowledge base but it has no “specific practical application” in sight.2  On the other hand, applied research is “work undertaken for the advancement of scientific knowledge with a specific practical application in view”.3 If your project attempted “to gain new scientific knowledge by advancing the current understanding of scientific principles, methodologies, or relations”, check off the box next to Line 620. 4

Remember, the advancement of scientific knowledge is the “generation of information or the discovery of knowledge that advances the understanding of scientific relations or technology” that the current knowledge base allows. 5 Even if your project did not achieve the desired results, it can still qualify as an advancement because “rejection of a hypothesis is advancement because it eliminates a possible solution”. 6

If your project’s results were published in “scientific journals and other peer-reviewed publications”, then this indicates you undertook basic or applied research. 7

Line 622: Experimental Development

If your project was attempting to achieve “a technological advancement for the purpose of creating new materials, devices, products, or processes, or to improve existing ones”, check off the box beside Line 622. 8

Technological development differs from basic or applied research because it achieves technological advancement which “moves the scientific or technological knowledge base of a company to a higher level” by increasing the understanding of technology.9 Thus, if your work uncovered new knowledge about the “technological principles, techniques, and concepts beyond the existing scientific or technological knowledge base”, you achieved technological development (good job!).10

Technological development leads to an advancement in your understanding of the technology. Technology is “the practical application of scientific knowledge and principles” in the form of “patents, procedures, design documents, manuals, etc”.11 If your project unearthed “knowledge of how scientifically determined facts and principles” are inherent in “material, device, product, or process”, your SR&ED work was likely technological development. 12

What if the purpose of the SR&ED work is both basic/applied research and experimental development?

This instance is very rare, so don’t check both boxes unless you have hard proof that both basic or applied research and technological development occurred. The overwhelming majority of the time, you will just pick one box.

What if there were multiple projects in the reported year?

If you are reporting multiple SR&ED projects, and some “involve experimental development and others involve basic or applied research”, you should check off both boxes.13

Summary: The Purpose of SR&ED Work

Line 620 and 622 ask a question that requires you to know your project and objectives: what was the purpose of your work? However, the important part of answering Line 620 and 622 is that you avoid unnecessarily checking off both boxes. An event in which both basic/applied research and technological development occurred is uncommon. Choose one.

Have you ever checked off both Line 620 and Line 622?
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Show 13 footnotes

  1. “Scientific Research and Experimental Development (SR&ED) Expenditures Claim Guide to Form T661.” Canada Revenue Agency, https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4088/t4088-15e.pdf. Accessed 30 Aug. 2019.
  2. “SR&ED Glossary.” Government of Canada, 15 July 2015, https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/glossary.html#bscrsrch. Accessed 30 Aug. 2019.
  3. “SR&ED Glossary.” Government of Canada, 15 July 2015, https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/glossary.html#ppldrsrch. Accessed 30 Aug. 2019.
  4. “Scientific Research and Experimental Development (SR&ED) Expenditures Claim Guide to Form T661.” Canada Revenue Agency, https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4088/t4088-15e.pdf. Accessed 30 Aug. 2019.
  5. “SR&ED Glossary.” Government of Canada, 15 July 2015, https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/glossary.html#dvncmnt.
  6. “Eligibility of Work for SR&ED Investment Tax Credits Policy.” Government of Canada, 24 Apr. 2015, https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/eligibility-work-investment-tax-credits.html#s2_1_4. Accessed 30 Aug. 2019.
  7. “Scientific Research and Experimental Development (SR&ED) Expenditures Claim Guide to Form T661.” Canada Revenue Agency, https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4088/t4088-15e.pdf. Accessed 30 Aug. 2019.
  8. “Scientific Research and Experimental Development (SR&ED) Expenditures Claim Guide to Form T661.” Canada Revenue Agency, https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4088/t4088-15e.pdf. Accessed 30 Aug. 2019.
  9. “Eligibility of Work for SR&ED Investment Tax Credits Policy.” Government of Canada, 24 Apr. 2015, https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/eligibility-work-investment-tax-credits.html#s2_1_4. Accessed 30 Aug. 2019.
  10. “Eligibility of Work for SR&ED Investment Tax Credits Policy.” Government of Canada, 24 Apr. 2015, https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/eligibility-work-investment-tax-credits.html#s2_1_4. Accessed 30 Aug. 2019.
  11. “SR&ED Glossary.” Government of Canada, 15 July 2015, https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/glossary.html#tchnlgy. Accessed 30 Aug. 2019.
  12. “SR&ED Glossary.” Government of Canada, 15 July 2015, https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/glossary.html#tchnlgy. Accessed 30 Aug. 2019.
  13. “Scientific Research and Experimental Development (SR&ED) Expenditures Claim Guide to Form T661.” Canada Revenue Agency, https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4088/t4088-15e.pdf. Accessed 30 Aug. 2019.

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