Question 3 continued

In a recent post (http://gordon-feil-sred.blogspot.ca/2017/01/question-3.html) we looked at the third question about a project to which CRA requires the answer to be Yes for the project to be considered as SR&ED.

Part of that question addresses experiment and analysis. Perhaps the easiest way is to quote directly from CRA’s website.

Experimentation and analysis are approaches used to investigate hypotheses. Experimentation involves structured and organized tests and studies to obtain information in order to address the hypotheses. Experimenting involves not only testing and analyzing but also exploring the relationships between tests, explaining the results as they relate to the hypothesis, drawing conclusions, proposing a new hypothesis, or conducting additional tests. Such experimentation can include work on the evolution of prototypes or models.

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 a systematic investigation or search and it can be used to generate or test a hypothesis.

Experimentation and analysis are not to be confused with “trial and error”. The purpose of the systematic investigation involving experimentation and analysis of the outcomes is to obtain understanding of relationships between the factors involved. Trial and error addresses What.  SRED addresses Why and How.
CRA expects that this work has been done by people qualified, by reason of experience or formal training, to perform the experimentation and analysis.

Question 3

Now we get into the third question used by CRA in evaluating SR&ED claims. We covered the first two at http://gordon-feil-sred.blogspot.ca/2017/01/uncertainty.html and http://gordon-feil-sred.blogspot.ca/2017/01/the-second-question.html. The third one has to do with whether the overall approach taken to resolve the technological uncertainties reflects “a systematic investigation” and includes testing the hypotheses through “experiment or analysis”.  Today I aim to look at this question from an overview perspective, and in a subsequent post to examine it in more detail.

You can’t very well hypothesize how to resolve the uncertainties if you don’t know what they are. And you don’t know what they are if you have not identified your objectives. Further, you don’t know if your objectives are met unless you have standards or benchmarks against which you can measure your achievements. All these have to be determined and stated early in the project.

Once that is done, it is easier to identify a methodology of experimentation and/or analysis that seems suited to the resolution of the uncertainties and consequential achievement of the objectives.

Once the methodology has been used, it should be easy to identify the results achieved and to document them. 

The Second Question

At http://gordonfeil.blogspot.ca/2017/01/technological-uncertainty.html we addressed the first of the five questions which must have a Yes answer for CRA to consider your project as SR&ED. 

The second question has to do with whether you formed hypotheses having the purpose of resolving the technological uncertainty addressed by the first question.  The formulation of an hypothesis does not happen in absence of consideration of the technological uncertainty. You can’t very well hypothesize a resolution unless you have thought about the problem.

An hypothesis, in the context of SRED, is an idea or suspicion about what might work in reducing or eliminating the technological uncertainty. It is best to write it down.  Every time you have an idea about what will might work, record the idea. This is so that you can provide evidence to CRA that the answer to Question 2 is Yes.