Technical vs. Technological in SR&ED:
Similar on paper, very different in practice.
In previous posts, we’ve dealt in part with the distinction between “technical” and “technological” within the Scientific Research and Experimental Development (SR&ED) program. These terms are easily confused but critically important to differentiate from one another. In this post, we’ll do a side-by-side comparison of the two definitions to help clarify the terms for SR&ED newbies and re-solidify the terms for the SR&ED initiated.
A Problem or an Uncertainty?
The new guide to SR&ED (2.1.1 Was there a scientific or a technological uncertainty? – released December 2012) offers the following definitions for technical problems and technological uncertainties:
Technical – “A technical problem is resolved by applying practices, techniques, or methodologies that are known by the company or available in the public domain. In other words, the existing technology base or level is sufficient to resolve technical problems. Overcoming a technical problem will not lead to a technological advancement, although it may lead to the creation of a new or improved product or process.”
Technological – “…a technological uncertainty cannot be resolved using the existing technology base or level and requires experimental development to resolve the problem.”
Following vs. Forging in SR&ED
By means of explanation, it may be helpful to think of technical problems and technological uncertainties as two very different paths in the woods:
The solution to a technical problem lies somewhere along a pre-existing path in the woods. Although the path has several obstacles (overgrowth, flooded sections, etc.), the tools required to overcome these obstacles lie alongside the path and are fairly accessible.
The solution to a technological uncertainty is buried deep within the woods and has no discernible path leading to it. The tools required to a) create the path, and b) overcome any additional obstacles encountered while on the path are not readily accessible and may not even exist yet.
In essence, a technical problem = following a pre-existing path that offers some degree of navigability, and a technological uncertainty = forging a completely new path.
Semantics That Affect Your SR&ED Return
Understanding the difference between technical problems and technological uncertainties may seem like an unnecessary case of semantics — technical and technological are such easily interchangeable words! However, confusing these terms can have a dollar-and-cents impact in your SR&ED return.
If your SR&ED claim focuses only on solving technical problems, you will not be able to re-coup or cover all of the costs involved. The SR&ED program only supports costs related to technological advances/uncertainties/work performed i.e. costs related to forging a new path.
Do yourself and your SR&ED claim a favour — make sure you understand the difference between technical vs. technological SR&ED work and how these terms relate to your specific project. (For more on this topic, please see Constructs: The Hidden SR&ED Problem.)