[GnarfGnarf]

The SR&ED reporting process is a nightmare. I once spent 170 hrs. defending a piddling $100K claim. Hell is spending 8 hrs. in a room trying to explain polymorphism and encapsulation to an accountant. The whole process is geared towards engineering, physical processes and manufacturing. The subtleties and abstraction of software development make it look like we take no risks.

The time-tracking requirements seriously degrade your productivity.

I joked that if you discovered time travel, you wouldn't qualify for SR&ED because you were successful, so there was obviously no risk involved, ergo you don't qualify.

[rbobby]

It's pretty difficult to get software development to qualify for SR&D. The way it was explained to me by a consultant was to qualify there had to be technological risk of failure (i.e. it is unknown whether or not it is possible to do task X via software).

So your average SAAS startup doesn't face technological risk, even though they face lots of business risks (might not be able to hire good enough developers, might not be able to produce bug free app, etc).

However the first few companies using deep learning to do facial recognition from photos (eg. facebook automatic tagging)... well they would have faced technological risk. It wasn't known at the outset that deep learning would produce sufficient quality matches to be useful.

On the downside... big organizations that can pay big bucks for assistance with writing SR&D applications can qualify for S&RD. Several of the big Canadian banks have recovered considerable amounts. Which is pretty outrageous on the face of things... how much actual SR&D and technological risk is being faced in a banking environment? None that I've ever seen (well... except for one project I was involved in... but that was a trivial "lets try this and see if we can use shared record locks as activity signals for a job scheduler").

In a way scientific/technological risk is a bad measure for software R&D. In general there is very little technological risk, and what risk there is is generally tackled via prototyping and/or early testing. The meat of the development costs comes much later... and there's no gov't tax support for that at all.

[thaumasiotes]

> The way it was explained to me by a consultant was to qualify there had to be technological risk of failure (i.e. it is unknown whether or not it is possible to do task X via software).

Ok...

> However the first few companies using deep learning to do facial recognition from photos (eg. facebook automatic tagging)... well they would have faced technological risk. It wasn't known at the outset that deep learning would produce sufficient quality matches to be useful.

This is a wildly different standard. It certainly was known at the outset that facial recognition from photographs is possible to do in software, because people do it all the time. They just didn't know how.

[stormbrew]

> It's pretty difficult to get software development to qualify for SR&D.

Every Canadian software company I've worked for in my 15 year career has used SR&ED.

Every single one. Most were small (ie. sub-25 people employed, most of those also making virtually no profit at all), a couple are large. Some tried to do it in house with only a lawyer to do late-stage massaging of the reports, others hired full on consultants for quite a lot of money to do it.

And they all got money out of SR&ED.

This is anecdata, but I don't think the idea that it's pretty difficult washes.

[herge]

I think banks face big risks with software projects through project management, but that's less tied to SR&ED ;)

[ska]

  you wouldn't qualify for SR&ED because you were successful, so there was obviously no risk involved,

There are all kinds of risks you face that have nothing to do with SR&ED.

I'm not surprised you had a difficult audit if you were talking about things like "explaining polymorphism and encapulation" - sounds a description of activities in software development that are clearly not SR&ED-able.

[wwhchung]

I agree that there are many other issues with SR&ED (including the one you mentioned above). I just chose to tackle one that I could put clear numbers and examples to and viable solutions. With respect to the SR&ED process itself, that's going to be another post once I have a well thought out proposal and data to back it up. :)

[nickff]

>"I joked that if you discovered time travel, you wouldn't qualify for SR&ED because you were successful, so there was obviously no risk involved, ergo you don't qualify."

You could even be prosecuted for tax avoidance, given the vague standard.