This article talks about SR&ED process thinking, first by examining the concept and characteristics of a framework for pursuing SR&ED, and then, secondly, by reflecting on the processes that might be needed as a part of such a framework.
I think a spider web is a useful paradigm for building SR&ED-supportive processes within your company. Have you ever watched a spider spinning a web? One tiny thread patiently joined from one point to another, until eventually … coverage.
I don’t want to extend this example tediously, but there are three aspects to the spider’s web that are worth commenting on: linkages, framework, and coverage.
First, you start with linkages – one thing links to another, and to another. Technical SR&ED work needs to be linked to the evidence of the work, which needs to be linked to the costs of doing that work. Creating those linkages, the chain of evidence from the SR&ED and supporting work to the costs, is something that you should think about frequently. As I see it, this “thinking about SR&ED” is a matter of habit. You get used to thinking about “SR&ED and …something” -- SR&ED and project management, SR&ED and project costing, SR&ED and payroll , SR&ED and … nearly everything.
From the gradual accumulation of linkages, one develops a framework – a structure that needs to be both lightweight and comprehensive. Both of these are essential attributes. The framework needs to be lightweight, because SR&ED is about supporting your business, and it is the business that drives the technical work. The SR&ED framework also needs to be comprehensive, because it is meant to help you maximize your SR&ED claims, so as to take best advantage of the benefits for which you may be entitled.
Finally, your framework needs to provide coverage. Once you have established linkages, and developed a framework that is sustainable and lightweight, then the emphasis on coverage is about working to fill in the gaps and weaknesses in your SR&ED process.
Of course, a framework feels like a fairly static thing – it’s not exactly a process, but more like the context for processes -- so thinking about or planning a framework, while it is important, is not going to be enough. So far, I’ve talked about the attributes or characteristics of a SR&ED framework – but what actually should make up such a framework?
I think there are at least three major aspects to a SR&ED framework, and maybe more, that should be embodied within processes and sub-processes.
First off, there needs to be a process – call it the Science process -- that surrounds the technical work itself … from the initial identification of potential SR&ED, to dealing with the actual SR&ED work, up to the detection of the end of SR&ED. That Science process needs to include the following sub-processes: detection (or recognition) and documentation. There also needs to be a second major process – call it the Financial Process – that concerns itself with demonstrating and quantifying the linkages between the Science effort and the costs, as well as satisfying some criteria around the nature of those costs. The third and final process revolves around filing the claim – as a part of your corporate taxes – and organizing your resources – material and human – to defend a SR&ED claim once it is made and is being subject to review.
Process thinking, for SR&ED, should be a cycle that strives continuously to achieve near-effortless and reflexive identification of potentially eligible work, followed or augmented by a relentless determination to first document and then demonstrate the linkages between the eligible work and its associated costs.
To be continued next week.
Bruce Madole