The CRA has published a Scientific Research and Experimental Development (SR&ED) Glossary for informational purposes to provide a plain language explanation of some of the terms used in SR&ED tax credit policy. Several of the terms and definitions have been modified in the SR&ED update of April 24, 2015. Most of these SR&ED glossary changes are simply a matter of clarification, ease in readability, or elimination of redundancy. The terms analysis, engineering, hypothesis, scientific or technological knowledge base, social sciences, and systematic investigation or search have all been slightly modified. The table below provides a comparison of the old and new definitions as well as an explanation of the changes.

Old VS New Definitions in the SR&ED Glossary: Terms and Changes1

Old Definition
New Definition
Changes
Analysis / Analyse

Analysis is the detailed examination of information to differentiate the various parts of a whole, determine their attributes, or explain their relationships. It is performed against the background of available knowledge and experience and it involves using tools such as models, graphs, statistics, tables, diagrams, mathematical formulas, and computer programs to express this knowledge or experience. Analysis is an integral part of the scientific method and it can be used to generate or test a hypothesis.
Analysis / Analyse

Analysis is the detailed examination of information to differentiate the various parts of a whole, determinetheir attributes, or explain their relationships. It is performed against the background of available knowledge and experience and it involves using tools such as models, graphs, statistics, tables, diagrams, mathematical formulas, and computer programs to express this knowledge or experience. Analysis is an integral part of the systematic investigation or search and it can be used to generate or test a hypothesis.
The term "scientific method" has been replaced by the phrase "systematic investigation or search" since the former is no longer used in policy.
Engineering / routine engineering / Travaux de génie / travaux d’ingénierie / ingénierie

Engineering is the practice of designing, composing, evaluating, advising, reporting, directing, or supervising the construction or manufacturing of tangible products, assemblies, systems, or processes that requires in-depth knowledge of engineering science and the proper, safe, and economic application of engineering principles.

By definition, and according to sound professional practice, engineering practice does not involve scientific or technological uncertainty and is thus not eligible on its own. However, engineering work that is commensurate with the needs and directly in support of basic research, applied research or experimental development is eligible.
Engineering / Travaux de génie / ingénierie

Engineering is the practice of designing, composing, evaluating, advising, reporting, directing, or supervising the construction or manufacturing of tangible products, assemblies, systems, or processes that requires in-depth knowledge of engineering science and the proper, safe, and economic application of engineering principles.

By definition, and according to sound professional practice, engineering practice does not involve scientific or technological uncertainty and is thus not eligible on its own. However, engineering work that is commensurate with the needs and directly in support of basic research, applied research, or experimental development is eligible.

It is important to distinguish between work with respect to engineering and the work that engineers perform. Even though engineering practice is not eligible on its own, engineers can still be carrying out basic research, applied research, and experimental development.
"Routine engineering" has been removed as there is no differentiation between engineering and routine engineering. A paragraph was added to clarify that even though engineering practice on its own is not eligible, engineers could still be performing basic research, applied research, or experimental development.
Hypothesis / Hypothèse

A hypothesis is a tentative supposition with regard to an unknown state of affairs, the truth of which is thereupon subject to investigation by any available method, either by logical deduction of consequences that may be checked against what is known, or by direct experimental investigation or discovery of facts not hitherto known and suggested by the hypothesis.
Hypothesis / Hypothèse

A hypothesis is an idea, consistent with known facts, that serves as a starting point for further investigation to prove or disprove that idea.
The explanation has been simplified to improve understanding and readability.
Technology base or level / Base ou niveau technologique

Technology base or level refers to the existing level of technology and consists of the knowledge of the technological resources within the company and sources available publicly.

The technological resources within the company include:
  • Technical, knowledge, education, training, and experience of its personnel; and
  • its technical capabilities typified by its current products, techniques, practices, and methodologies (for example, trade secrets and intellectual property).

  • Publicly available sources generally include scientific papers, publications, journals, textbooks, and internet-based information sources as well as expertise accessible to the company (for example, through recruiting employees or hiring contractors). The company is expected to have information that is common knowledge at the time the work is performed. Common knowledge is knowledge available to professionals familiar with the specific areas of science or technology in question.

    It is recognized that the technology base or level will vary from company to company because the internal resources vary from company to company, even though the knowledge available publicly remains the same.
    Scientific or technological knowledge base / Base de connaissances scientifiques ou technologiques

    Scientific or technological knowledge base refers to the existing level of technology and scientific knowledge, and consists of the knowledge of the resources within the company and sources available publicly.

    The resources within the company include:
  • technical knowledge, education, training, and experience of its personnel; and
  • its technical capabilities typified by its current products, techniques, practices, and methodologies (for example, trade secrets and intellectual property).

  • Publicly available sources generally include scientific papers, journals, textbooks, and internet-based information sources as well as expertise accessible to the company (for example, through recruiting employees or hiring consultants or contractors). The company is expected to have information that is common knowledge at the time the work is performed. Common knowledge is knowledge available to professionals familiar with the specific areas of science or technology in question.

    It is recognized that, although the knowledge available publicly is the same for all companies, the scientific or technological knowledge base may vary from company to company because the internal resources can vary from company to company.
    The term "technology base or level" has been changed to "scientific or technological knowledge base" to clarify that the concept applies equally to basic research, applied research, and experimental development. "Publications" has been removed from the list of sources generally included in as publicly available to eliminate redundancy. "Consultants" was added to the list of examples of expertise accessible to the company. The last paragraph was modified for readability.
    Social sciences / Sciences sociales

    Social sciences are disciplines characterized by their concern with human beings, their culture, and their economic, political, and social relationships with the environment.

    Academicians generally categorize knowledge into four main areas: physical sciences, biological sciences (or natural sciences), humanities, and social sciences, although others recognize only two categories: natural sciences and social sciences. Generally, the social sciences include anthropology, economics, political science, psychology, sociology, criminology, education, geography, law, psychiatry, philosophy, religion, and history. Management is also considered a social science.

    Work with respect to research in social sciences is specifically excluded from the definition of SR&ED. However, under certain circumstances, work with respect to psychological research may be eligible.
    Social sciences / Sciences sociales

    Social sciences are disciplines characterized by their concern with human beings, their culture, and their economic, political, and social relationships with the environment.

    Academicians generally categorize knowledge into four main areas: physical sciences, biological sciences (or natural sciences), humanities, and social sciences, although others recognize only two categories: natural sciences and social sciences.

    Generally, the social sciences include anthropology, economics, political science, psychology, sociology, and sometimes education, law, philosophy, religion, and history. Management is also considered a Work with respect to research in social sciences is specifically excluded from the definition of SR&ED. However, under certain circumstances, work with respect to psychological research may be eligible.
    "Criminology", "geography", and "psychiatry" were removed from old definition. Additionally "and sometimes" was added to new definition to indicate that education, law, philosophy, religion, and history are not always considered social sciences.
    Systematic investigation or search / scientific method / Investigation ou recherche systématique / méthode scientifique

    The systematic investigation or search called for in the definition of SR&ED is an approach that includes defining a problem, advancing a hypothesis towards resolving that problem, planning and testing the hypothesis by experiment or analysis, and developing logical conclusions based on the results. This approach to performing SR&ED is referred to as the scientific method.

    For more information, please refer to section 2.1.3 of the Eligibility of Work for SR&ED Investment Tax Credits Policy.
    Systematic investigation or search / Investigation ou recherche systématique

    The systematic investigation or search called for in the definition of SR&ED is an approach that includes defining a problem, advancing a hypothesis towards resolving that problem, planning and testing the hypothesis by experiment or analysis, and developing logical conclusions based on the results.

    For more information, please refer to section 2.1.3 of the Eligibility of Work for SR&ED Investment Tax Credits Policy.
    "Scientific method" has been removed from the explanation as it is no longer used in policy.

    The remaining SR&ED Glossary terms are unchanged as of April 24, 2015. For more information on these changes please see the complete SR&ED Glossary.

    This article is based on CRA policy documents available at the date of publication. Please consult the CRA website for the most recent versions of these documents.

     

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    Show 1 footnote

    1. SREDucation. (2015). SR&ED Glossary: Key Definitions from the CRA Website. Retrieved from https://www.sreducation.ca/overview/sred-glossary-key-terms-sred-lexicon-identified-explained/

    Elizabeth Lance

    Elizabeth is known as the "SR&ED Maven" in the industry. With a love of documentation and the nuances of language, she is often engaged by multi-million dollar companies to help improve documentation and workflow processes. Her favourite sentence (which she hears regularly) is "Accepted as Filed". Find out more about her on LinkedIn.

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