SR&ED Case Study: Cost Targets Leading to Technological Uncertainty
Even though a cost target in itself does not necessarily create a technological uncertainty, a technological uncertainty might exist when the paths to meeting the cost target are technologically uncertain.
No specific technological uncertainty is identified in this example because what is specifically lacking in the scientific or technological knowledge base, which is preventing the cost target from being met, is not explained.
We cannot determine the eligibility without understanding the work performed and evaluating it using the five questions. In this example, there are indicators that suggest there may be uncertainty but they do not point to any specific uncertainty.
You want to develop an air recirculation system for energy-efficient homes that will permanently remove carbon monoxide. A key component of this system is a module in which carbon monoxide is converted to relatively harmless carbon dioxide at room temperature.
There is a process that uses a tin oxide and platinum catalyst to convert carbon monoxide to carbon dioxide at room temperature. You could develop a product that includes a module based on this process. However, the high cost of using this process will make the selling price of the product out of reach for your customers. There are other methods to convert carbon monoxide, but they are not effective at room temperature. It is important that the module operates at room temperature.
To achieve your project objective (a room-temperature carbon monoxide remover), you have to develop a new inexpensive process. There might be technological uncertainty associated with how to convert carbon monoxide to carbon dioxide at room temperature without using the costly tin oxide and platinum process.
Your motivation for doing the work is the cost target. The cost target—a business or commercial objective—by itself does not create a technological uncertainty. However, a technological uncertainty might arise from the need to meet the cost target, even though a more costly process is known to work.
Source: CRA (Canada Revenue Agency)
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