SR&ED – Research in the Medical Industry

If you are in private practice and are established as a Medical Professional Corporation performing either Research and/or Experimental Development, you may be eligible for significant tax credits under the SR&ED program.

Subsection 2900(1) of the Regulations defines the following categories of scientific research and experimental development:

(a)  basic research, namely, work undertaken to advance scientific knowledge without a specific practical application in view;

(b) applied research, namely, work undertaken to advance scientific knowledge with a specific practical application in view;

(c)  experimental development,  namely, work undertaken to achieve technological advances for the purpose of creating new, or improving existing, materials, devices, products, or processes, including incremental improvements.

This blog will address the first two categories as to how to describe your research project within the context of the SR&ED program.

The answers should concentrate on the scientific facts and be in the scientific language and style of those who did the actual work.

Use existing materials and documents generated during the course of your research work to complete two sections below.

Describe the scientific knowledge that you were trying to advance.

In responding to this question,

1. Describe the scientific knowledge that you gained or were attempting to gain with the work you did;
2. Explain why the new knowledge gained as result of your work is an advance relative to the scientific knowledge that was available at the onset of the project, regardless of success or failure; and
3. Indicate how the results of your experiments or analysis advanced the understanding of scientific principles, methodologies, or relations.

   Reference: Information Circular IC86-4R3

Summarize the work performed in the tax year and explain how that work contributed to the advancement of scientific knowledge.

In responding to this question,

1. Describe only the work that was actually carried out during the tax year and for which you are claiming expenditures in the tax year;
2. Describe the principles underlying the new concepts that will address the inadequacies of the existing scientific knowledge; and
3. Summarize the experiments and/or analysis conducted, including the results obtained, their interpretation, and the conclusions made. Make sure your conclusions relate to the scientific knowledge that you were attempting to gain as stated previously.

   Reference: Information Circular IC86-4R3

In our next blog we will touch on Experimental Development and the Medical Industry.