American Animal Nutrition Organization (AANO) is dedicated to providing natural, non-antibiotic solutions to varied animal health and nutrition issues.

In 2012, AANO decided to take part in an eight-year study to ensure that Canadian beef was a high quality meat that was environmentally responsible, safe and nutritious. AANO created a hypothesis for this program of investigation which stated,

“With knowledge  of  the  intrinsic  factors  regulating  the  metabolism  of  the gastrointestinal  tract,  we  can  identify  mechanisms  for  improving  feed  intake,  enhancing  feed efficiency and reducing the reliance on antibiotic use.”

The first research phase of AANO’s SR&ED study involved  identifying  the  intrinsic factors  that regulated feed intake in the cow and developing a suitable, low temperature, high moisture pellet that facilitated the ingestion of the feed by cows.

To achieve  its  technical objectives and overcome  the  related  technical  risks, the AANO generated new knowledge at the conclusion of each experimental stage and built upon that knowledge at every stage of the remaining project.

After undergoing its first year of experimentation, AANO needed to determine the eligibility of its proposed SR&ED activities in order to know if they qualified for the Scientific Research and Experimental Development Tax Incentive Program. To be eligible, AANO had to be certain that its activities met the definition of scientific research and experimental development in subsection 248(1) of the Income Tax Act (see Commentary below). After self-assessing, AANO decided to register the following SR&ED expenditures with the CRA.


Design and development of a series of prototypes to achieve the technical objectives and prove the hypothesis (design and adaptation of the chemosensory testing model).

AANO’s main objective for this activity was to determine whether a model for identifying cow preferences based on the chemosensory properties of an ingredient could be designed and developed. This experimentation phase included:

  • Identification of substances known to have an impact on feed intake and efficiency.
  • Validation of a model for identifying cow preferences based on the chemosensory properties of an ingredient.
  • Determination of the statistical sensitivity of the model for identifying the preferences of different ingredients and purification of feed ingredients.
  • Determining of optimal feed processing conditions for retaining the intake improvement of an ingredient in a commercially relevant cow feed.

Trials and analysis of data to achieve results that can be reproduced to a satisfactory standard (development and testing of feed intake and efficiency enhancers).

The hypothesis for this AANO activity stated that with improved knowledge of the intrinsic factors regulating the metabolism of the gastrointestinal tract, it was possible to identify mechanisms for improving feed intake, enhancing feed efficiency and reducing the reliance on antibiotic use.

Details of this experiment included development of the enhancers based on information gained through the model and testing of the enhancers to ensure efficiency, accuracy and safety.

Background research to evaluate current knowledge gaps and determine feasibility (background research for feed intake and efficiency stimulants).

AANO’s background research included literature search and review, consultations with industry professionals and potential customers, and preliminary equipment and resources review.

The activities conducted during the background research were eligible because they assisted in identifying the key elements of the research project.

Ongoing analysis of customer or user feedback to improve the prototype design (feedback SR&ED of the feed intake and efficiency enhancers).

AANO’s eligible SR&ED activity for this phase of its project included:

  • Ongoing analysis and testing to improve the efficiency and safety of the project.
  • Ongoing development and modification to interpret the experimental results and draw conclusions that served as starting points for the development of new hypotheses.
  • Commercial analysis and functionality review.

These activities were necessary to evaluate the performance capabilities of the new design in the field and to improve any flaws in the design, therefore qualifying as SR&ED.


To qualify, the work must meet the following definition of “scientific research and experimental development” (SR&ED), as defined in subsection 248(1) of the Income Tax Act.

“Scientific research and experimental development” means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis and that is:

(a) basic research, namely work undertaken for the advancement of scientific knowledge without a specific practical application in view;

(b) applied research, namely work undertaken for the advancement of scientific knowledge with a specific practical application in view; or

(c) experimental development, namely, work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto;

and, in applying this definition in respect of a taxpayer, includes:

(d) work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing or psychological research, where the work is commensurate with the needs, and directly in support, of work described in paragraph (a), (b), or (c) that is undertaken in Canada by or on behalf of the taxpayer.



Similar to any tax credit or deduction, AANO had to save business records that outlined what it did in its SR&ED activities, including experimental activities and documents to prove that the work took place in a systematic manner.

AANO saved the following documentation:

  • Background research
  • Project records and laboratory notebooks
  • Photographs / videos of extrusion process
  • Testing protocols
  • Results or analysis from testing / trial runs
  • Records of resource allocation / usage logs
  • Tax invoices

By having these records on file, AANO confirmed that it was “compliance ready” — meaning if it was audited by the CRA, it could present documentation to show the progression of its SR&ED work.

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