The Globe and Mail

Who’s eligible for the claim?

The definition is purposely broad. And the act allows for even “incremental” advances. For example, that could include work aimed at “improving existing, materials, devices, products or processes, including incremental improvements.”

Who isn’t?

Some activities are specifically excluded, such as market research, routine testing and data collection. But the range of eligible work is still wide open if a claimant can demonstrate that what they do involves an element of uncertainty and advances existing technology.

How are the rules bent?

With a little imagination and some creative writing, a lot of activities that are part of the normal course of business can easily qualify.

Think of an auto parts maker that is continually making new moulds for various plastic parts, such as forming exhaust manifolds. It might sell those moulds or use them internally to produce new products.

So is this routine commercial production or work that advances the technology? In an given year, CRA would get hundreds, if not thousands, of applications such as this from auto parts makers, tax consultants say.

How does the credit work?

As an example, if that Ontario parts maker spends $5-million on R&D, the company would get a 35 per cent instant refund from Ottawa and another 10 per cent from the province on the first $3-million it spent. That’s worth $1.5-million in cash. The company is also eligible for 20 per cent on everything else, or up to a $300,000 credit against any taxes it owes.