Claiming the R&D tax credit

Claiming the R&D tax credit

When claiming the R&D tax credit, a company must be in a position to demonstrate that its claim can satisfy two essential tests.

When claiming the R&D tax credit, a company must show that it can satisfy two tests.

The accounting and science tests

When claiming the R&D tax credit, a company must be in a position to demonstrate that its claim can satisfy two essential tests, the accounting test and the science test, with records being maintained to satisfy both.

  • The accounting test ensures the expenditure included in the claim relates to the R&D activities and is correctly claimed. The company must maintain a record of the expenditure incurred in the carrying on of the R&D activities for which it is claiming.
  • The science test ensures the activities included in the claim are consistent with the statutory definition of R&D. The science test examines whether or not an activity: 
    • is systematic, investigative, or experimental in nature; 
    • is carried out in a Revenue approved field of science and technology; 
    • is basic research, applied research or experimental development; 
    • seeks to achieve scientific or technological advancement; and involves the resolution of scientific or technological uncertainty. 

It should be noted that there is no specific requirement for an R&D activity to successfully meet its objectives in order to qualify for the R&D tax credit.  

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R&D Tax Credits

Accounting for R&D tax credits.

 
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