Dealing with technology? You might be eligible for government funding

SR&ED (Scientific Research & Experimental Development) is an incentive program by the Canadian government that refunds companies involved in Research and Development (R&D). (See the information about the program on the CRA website.) Canadian companies that spend money on creating or modifying products or processes through experimenting are eligible for SR&ED. Any company that deals with technology (software and hardware development, machinery, printing etc.) may qualify. If you created an entirely new industrial process or improved an existing one, if you took a database driver and rewrote it so its performance doubled, if you came up with a fuzzy logic algorithm to facilitate scheduling - all of this may be eligible. Innovation, uncertainties you overcame, and technological advancement are the criteria for eligibility. Even failed experiments may qualify. Non-Canadian owned companies also qualify, if they pay salary in Canada.
The SR&ED program is available to companies involved in Research and Development (R&D). Eligible expenditures include your time, employee and subcontractors labour, materials and equipment. SR&ED money is given as a refund for work already done.
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Prospecting, Mining, and Diamond-Cutting


This article is by Bruce Madole who kindly agreed to provide some interesting materials related to SR&ED.


In the evolution of a highly successful and process-driven SR&ED program, there are three stages:  prospecting, mining, and diamond-cutting.
I define these stages as follows:
Prospecting    
Characterized by investigation and detection, i.e., go out and find it, bring it back, cash in (write up claim, submit, defend), repeat next year.
Mining  
Characterized by organized processes to exploit known opportunities, develop claims in bulk, as supported by processes
Diamond-cutting    
Refers to the shift from “investigator” to “claim polisher” – even where processes drive the creation of large-scale claiming, there’s always a role for an expert to “make the diamond sparkle”, or to best position a SR&ED claim.
Sometimes it appears that the entire SR&ED consulting industry is built around the “prospector” model.  The consultant enters a new field (the client company), and prospects around looking for the “nuggets” or uncut gems of potential SR&ED.  In fact, for a while, the idea of the “technology nugget” was widely employed by CRA as a literary device to help claimants grasp the distinction between the wider “business project” and the smaller dimensions of a technology-centric set of activities typical of a SR&ED project.  (I’m not making value judgments about mining here, just adopting a convenient metaphor.)
However, it’s clear that most companies never move beyond the prospecting model, and the SR&ED consulting industry, in general, appears to be fixated mostly in this mode of operation.  (I wonder, sometimes, that we in the SR&ED industry have not done more to add enduring value or residual process improvement in the client environment, as a part of our consulting work, but I wonder, equally, why clients have so seldom demanded it. ) However, things appear to be changing for the better.

Many SR&ED consultants have begun to present their clients with a “SR&ED Application” of some kind, intended to help them organize their SR&ED claims supporting evidence.  Competitive pressures drive this behavior, but I see these solutions presented too often as a one-size-fits-all overlay to existing systems and processes, unintelligently, and with no efforts made to understand the client environment, or to truly consult on the needs of the client. (And truly, isn’t there a risk that the consultant in that role has become a system salesman, primarily concerned with flogging the solution?
Objectivity, in such circumstances, may truly lie in recognizing that the customer may not need the solution being proposed, but could be better served by modifying existing services or processes… a consultant who tries only to “close the deal” on a system solution is not truly serving his client.)
I may digress, but it seems to me that the healthiest evolution of a process within a company is to use existing and available processes in as transparent and lightweight a fashion as possible.  Minimizing impact is a key to minimizing the resistance to organizational change, and process transformation or re-engineering is unquestionably “change”.
Making the shift from simple prospecting to more process-driven and systematic exploitation of SR&ED  opportunities – mining – implies some patient work in the level of organizational change, some negotiation, tweaking or transformation of complex sets of inter-related processes.
The indicator of successful “SR&ED Mining” is the consistent and wholesale delivery of SR&ED prospects from across an organization, together with a consistently sufficient set of supporting evidence, both the technical and financial.  (The SR&ED team, in this model, may be entirely in-house, or a combination of the in-house team and external consulting support.  In any configuration, broad transformations of process are required to reach this stage.)
The role of the SR&ED expert/team and their energies are thus shifted, eventually, from prospecting to polishing:  choosing the best and finest and most beneficial opportunities for claim, and ensuring that they are presented in their best light.


Bruce Madole
Other articles by Bruce Madole in SRED Unlimited blog