What is Technological Uncertainty?
The first step to claiming the SR&ED tax credit involves confirming if SR&ED was carried out. The CRA has methodologies outlined to help you review and see if you meet their definitions, which can be a little complex. They first ask if there was any scientific or technological uncertainty?
According to the CRA, technological uncertainty refers to whether a given result or objective can be achieved or how to achieve it, is not known or determined on the basis of generally available scientific or technological knowledge or experience. Specifically, it is uncertain if the goals can be achieved at all or what alternatives (for example, paths, routes, approaches, equipment configurations, system architectures, or circuit techniques) will enable the goals to be met based on the existing scientific or technological knowledge base.
In simpler terms – anything, including method or materials, that is not known at the start of the project, and could not be easily determined by an expert in the field, could be technological uncertainty.
For instance, a software company might experience technological uncertainty in how to achieve optimal speed and performance, or the technology needed to achieve their goals. A construction company might see technological uncertainty in selecting materials or configuration in a design, or how to achieve structural integrity,
Through this test, they are looking to see if there was technological uncertainty that you then used a systematic approach to overcome. They want to see that this project was not straightforward, but that you encountered challenges along the way. With this in mind – don’t shy away from highlighting any failures you encountered. If you tried a method and it did not work, that should be included in the application! The CRA uses these failures to confirm that your project required a process of experimentation to get the right result. Even still, if your whole project gets scrapped, it could still qualify – after all, you still did the experimentation.