SafeMark Gas Experts (SafeMark) has been involved in gas detection in the workplace for over 40 years and offers safety solutions to Canada’s infrastructure and resource companies. To maintain the trust of its clients and keep its industry-leading reputation, SafeMark conducts regular SR&ED work.

In March of 2017, SafeMark found a need for a guard that detected flammable materials which led to the start of Project Flame Guard in April of 2017. The hypothesis for its project was that SafeMark could design and develop an examined guard with innovative features to detect flammable material in an improved manner to what currently existed on the market.

To qualify for the Scientific Research and Experimental Development Tax Incentive Program, SafeMark had to make sure 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, SafeMark declared the following experiments as SR&ED work.


Design and development of a series of prototypes to achieve the technical objectives (design of the examined guard).

SafeMark’s hypothesis for its experiment questioned whether it was feasible to design an examined guard to detect flammable materials that was easier to use in the field and reduced operating costs for clients.

The experiments SafeMark conducted in the design phase mainly consisted of computer modeling, conceptual engineering drawings and mathematical calculations. These experiments could only be proven effective or ineffective in the prototype development and testing phase. Following the experiments in that phase, during which the product was built and tested in various applications, the design was modified and re-tested until the desired outcome was achieved.

Background research to evaluate current knowledge gaps and determine feasibility (background research for the examined guard).

SafeMark’s eligible SR&ED activities during this phase of experimentation included:

  • Literature search and review, including maintaining up-to-date knowledge on relevant certification and standards.
  • Consultation with industry professionals and potential customers to determine the level of interest and commercial feasibility of the product.
  • Preliminary equipment and resources review with respect to capacity, performance and suitability for the project.
  • Consultation with key component/part/assembly suppliers to determine the factors they considered important in the design and to gain an understanding of how the design needed to be structured accordingly.

The background research conducted by SafeMark was directly related to the main objective of designing a guard capable of detecting flammable materials, therefore qualifying as SR&ED.

Ongoing analysis of customer or user feedback to improve the prototype design (feedback of the examined guard).

The feedback of the examined guard 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.

This feedback was necessary to evaluate the performance capabilities of the new design in the field and to improve any flaws in the design. There was a direct correlation between the feedback and the design process of the examined guard, making it an eligible SR&ED activity.


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 deductionSafeMark had to save documents that outlined what it did in its SR&ED activities, including experimental activities and business records to prove that the work took place in a systematic manner.

SafeMark saved the following documentation:

  • Background research
  • Meeting notes or progress reports, including internal project management issues and updates
  • Conceptual sketches
  • Design drawings
  • Emails

By having these records on file, SafeMark 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 activity, ultimately proving its eligibility for the SR&ED credit.

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