SR&ED Project Titles: First Impressions Matter (Line 200)
Updated to Reflect New Policies (2022)Â
*** Some of the policies referenced were updated 2021-08-13. This article has been updated and is accurate as of 2022. ***Â
When applying to the Canada Revenue Agency for Scientific Research & Experimental Development (SR&ED) investment tax credits, the information you provide in each section can ultimately decide its fate in the hands of a discerning CRA agent. Make sure you are on target for a successful application by considering the information provided below.
Background: SR&ED Project Titles
When you are completing the “technical narrative” portion of the T661, one of the first sections you asked to complete is the project title (Line 200). The CRA reviewer reading your SR&ED project will scrutinize these 60 characters to establish “the nature of your scientific research and experimental development (SR&ED) work”.1 Line 200’s importance can’t be overemphasized.
An ideal title will check the following boxes:
- It will be free of commercial-based buzzwords.
- It won’t be the commercial product’s name.
- It should be engaging and descriptive.
Shaping a title can be difficult, but following these rules can make your title effective and establish the nature of your SR&ED with crystal clarity.
1. Commercial Buzzwords
Commercial buzzwords (for example: “product”, “business”, “low-cost”, etc.,) can have the CRA reviewer thinking your SR&ED is ineligible within seconds. The Eligibility of Work for SR&ED Investment Tax Credits Policy specifically states “Market research or sales promotion” counts as ineligible work and should be excluded.2 Commercial buzzwords are blood in SR&ED water. Be diligent to assert the experimental development claimed, and why it is eligible.
2. Product Names
When a product name is the title of an SR&ED application, it creates confusion. The development is not the larger product or endeavor – it is simply a certain aspect of it. The Guidelines on the eligibility of work for scientific research and experimental development (SR&ED) tax incentives states that SR&ED does not include work with respect to “the commercial production of a new or improved material, device or product or the commercial use of a new or improved process”.3 Therefore your title being your product name may be misleading as it suggests that your development was commercially focused. You will want your project title to focus on the underlying technology. Phrase it to focus not on what it does, but how it does it.
3. Engaging, Descriptive Titles
Where possible, focus on the experimental development which you are claiming and its purpose. The title should explain “how the claimed work meets the SR&ED eligibility requirements”.4
Use the space allotted for the project title in an original, detailed way to help the reader understand “the nature and scope of the SR&ED”.5 Ensure that you emphasize the advancement or science/technology being explored. For example, the lackluster title “Smart Light Fixture” shines when it becomes “Light-sensitive light fixture able to self-schedule charge.” This intentional detail and focus on the development claimed ensures an intelligent, engaging title.
Important: Know Your Limits for SR&ED Project Titles
In the most popular tax software program for preparing SR&ED schedules, the section for your SR&ED project title (Line 200) has space for 60 characters. This count includes spaces. Take the time to determine exactly what you would like to say within the constraints of your form, to ensure it is not cut off in the tax software. Alternatively, the title can be listed both in Line 200 and at the start of Line 242 – but we don’t recommend using up space unnecessarily in this section for the title.
Summary: SR&ED Project Titles
Once your title checks all three boxes, and you’ve used as much detail possible within the character limit, you’re good to go. The strong first impression made by your SR&ED project title is as essential to a strong SR&ED report for demonstrating your eligibility for the program.