Many highly hopeful researchers, developers, innovators and engineers confuse these two terms … technical uncertainty and technological uncertainty. We already tackled the confusion around technological uncertainty and system level uncertainty involved in the SR&ED process in our article Technological vs System Uncertainty in SR&ED Claims.
SR&ED is About the Journey not the Destination
One of the key elements in determining SRED eligibility of a particular project is whether there was a technological uncertainty and technological advancement involved in your journey to achieve whatever new product or production process you were developing. Remember, creating something new or unique or something that brings a certain value-add to an industry does not, in and of itself, make it eligible for SRED.
You will need to show that the scientific research and experimental development you engaged in to create your product or process was NOT, in actual fact, “routine” or standard practice to address the problem you faced.
SR&ED reviewers are not solely looking for the business reason you decided to develop a product or process. While that business reason could lead to scientific research and experimental development and technological advancement, just because nobody else in the industry has your gadget does not make it automatically eligible for SRED. You will need to demonstrate why the current level of industry standard practice could not, within a reasonable doubt, achieve what you wanted or overcome the challenge you faced.
Definition of Technical Uncertainty vs Technological Uncertainty
The CRA defines a technical problem as one that is resolved by applying practices, techniques, or methodologies that are known by the company or available in the public domain. By contrast, a technological uncertainty cannot be resolved using the existing technology base or standard practice, and experimental development is required to resolve the problem.
“Technological uncertainty may arise from limitations of the current technology that prevent you from developing a new or improved capability. Technological uncertainty exists when you don’t know whether you can achieve a certain result or objective or how to achieve it based on generally available scientific or technological knowledge or experience.” Remember, even though you may create a new or improved product or process by overcoming a technical problem does not necessarily mean you have achieved a technological advancement or generated new knowledge—which is another key component of an eligible SRED project. [CRA SR&ED Guidelines]
A Tale of Two SR&ED Paths
Think of a technical uncertainty as a problem that leads you down a pre-existing path of knowledge and technologies available to your company, either within the current knowledge base, or from online/public domain resources. You may encounter several obstacles while navigating this path using your pre-existing knowledge, however, the resources available to you are sufficient to help you achieve your goal or solve your problem.
A technological uncertainty, however, requires deviation from the known, or knowledge within or readily available to your company. The solution for such a problem often has no obvious or definitive path not only in terms of which path to take, but also no way of anticipating what additional future obstacles you may encounter using any of the paths you identify.
To find out more about the difference between a technical uncertainty and a technological uncertainty see example 2 on this page – CRA SR&ED Guidelines.
One of our SR&ED Consultants would be happy to answer any further questions you might have.