SRED Case Study: Commensurate with the needs and directly in support


Only the amount, size, extent, or duration of work that is necessary for and directly in support of the basic research, applied research, or experimental development work undertaken in Canada is eligible.

The work below includes a production run to produce a product for testing. The context of the production run is not dealt with in this example.

We cannot determine eligibility without understanding the work performed and evaluating it using the five questions.

Related: Preparing Your Company For SRED CRA Review


You produce field hockey sticks in large numbers for the world market. The main element of the production stage is a machine that accepts pre-cut lengths of timber and produces the cut forms for further processing, which includes rasping, curing, and finishing.

You started a project involving experimental development. You wanted to integrate an advanced scanning and laser cutting technology to cut and rasp hockey sticks into one machine instead of having two separate machines. This integration step involved collecting data including size and other tolerances and testing for mechanical strengths and other performance requirements.

Based on statistical analysis and your in-house knowledge of the existing machinery, you determined that an experimental sample size of 500 sticks from the cutting and rasping machine would generate enough data to test and validate your hypotheses with 95% confidence. It would also be enough to conclude that the development is complete and successful.

You produced 2,000 sticks.

Related: SR&ED Consulting: Is Your Company Maximizing Potential Benefits?


The testing and data collection associated with cutting and rasping the first 500 sticks is commensurate with the needs and directly in support of your SR&ED work. (Note that this is all this example deals with. It does not deal with treating expenditures, including materials, for SR&ED investment tax credits.)

Source: CRA (Canada Revenue Agency)


For assistance in preparing your submission and to position your application for approval contact EVAMAX Group to help you with the process. You may also email us at or call 1-877-711-7733.

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