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The Canadian Revenue Agency (CRA) administers the Scientific Research and Experimental Development (SR&ED) program which is one of the most lucrative tax incentive programs for business-led R&D. The medical community has been able to access this tax credit and it has served as financial incentive to conduct research in this domain. Many aspects of a SR&ED claim are assessed by the CRA, including how the claiming entity is structured, the flow of money, contemporaneous records and technical eligibility. This blog reviews the determinants of a technically eligible SR&ED project. Medical R&D may include expert opinion and systematic analysis of previously conducted studies in the form of review articles, meta-analysis, studies to improve processes and quality of care, case reports and hypothesis-driven original research. When seeking grant funding or academic accolade the gamut of R&D is considered while for SR&ED-purposes only a subset would qualify. As a result there is often confusion as to SR&ED technical eligibility criteria within the medical domain.
What Qualifies a SR&ED Project?
The CRA identifies R&D projects as applied research, basic research or experimental development. Basic research is that which is conducted for the advancement of scientific knowledge without a specific practical application whereas applied research is R&D conducted with intent for practical application. Experimental development is work that is conducted for the purpose of achieving technological advancement for the development of new products or processes. Most medical research qualifies as applied research. The CRA disqualifies social science or humanity studies including education, economic and psychological research. Regardless of the type of R&D that is conducted, in-order-to qualify for the SR&ED tax credit, three basic criteria need to be met including development of a hypothesis, systematic investigation and identification of scientific or technological uncertainty in the context of the publicly available repository of knowledge. The start of a project is defined as the point at which a scientific or technological uncertainty has been identified and the end being once the systematic investigation into the uncertainty has been completed. As such, it is not necessary that the uncertainty be resolved but rather that a systematic investigation be undertaken to either disprove or prove a hypothesis. R&D endeavours which satisfy these requirements would be deemed to be a technically eligible SR&ED project.
Why You Need Help
The types of medical studies which therefore may not qualify include quality studies where the outcomes being investigated could be deemed as social science (ie. are patients more satisfied with treatment x versus y), case reports as they typically lack a hypothesis or even narrative review articles wherein systematic investigation has not been undertaken. Despite this, there are nuances that make deliberations on the eligibility of a medical R&D study difficult to interpret. For example, a researcher could undertake a study to investigate whether using treatment x versus y would lead to cost savings to the health system while also investigating associated health outcomes. In this scenario, it would be important to tease apart the project and claim expenditures (time) related to the health outcome assessment while excluding the economic impact portion of the study. Being able to identify eligible components for multi-faceted projects can be difficult. That’s why it’s important that you get the right advice.
MNP Can Help
MNP has a team of life scientists and tax specialists that are versed in identifying and framing medical R&D projects so that they satisfy requirements of the SR&ED program. Your claim should ideally be put together by such a team so that you are able to satisfy the CRA lest they review your claim. The R&D you do is important, Canada needs you, now let’s make sure that you are incentivized accordingly.
For more information, contact Jay McLean, Partner, SR&ED Services, at 519.725.7700 or
Related Topics:Scientific Research and Experimental Development
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