What is Technological Uncertainty?

The Scientific Research & Experimental Development (SR&ED) program is a cornerstone of Canada’s innovation strategy, offering tax incentives to businesses that take on challenging, forward-thinking projects. At the heart of SR&ED eligibility is the concept of technological uncertainty (TU)—a key criterion that distinguishes routine work from true innovation. But what exactly is technological uncertainty, and how does it apply to your projects?

TU arises when the solution to a technical problem is not readily apparent or achievable using existing knowledge, methods, or technologies. It’s the “unknown” that drives innovation—the gap between what is currently possible and what you’re trying to achieve.

TU is the gap between the extent of your knowledge to your goal

Indicators of Technological Uncertainty

TU is important because it serves at the starting point for SR&ED - everything else flows from the TU. Therefore, identifying TU early in a project is critical. Indicators to look out for include:

• Failure: The obvious solution did not work

• No Obvious Solution: Your search for available technologies has come up short

• Known Risk: Experience tells you that there are challenges with reaching your objective

How to Demonstrate Technological Uncertainty

Documenting TU is rarely done in industry, but it’s essential for SR&ED claims. To prove that your project involves technological uncertainty, you’ll need to document:

• Initial Search: Keep records of internet searches, publications, communications with suppliers and the initial thought process

• Failures: Dated documents of early issues prove when you can start claiming costs

• Technological Advancements (TA): the flip side of TU is the TA - tracking what you learn supports eligibility, even if the desired outcome wasn’t fully achieved

Examples of Technological Uncertainty

• Manufacturing: New equipment is purchased to improve your process - however, the supplier agrees there are known risks to integration with your existing equipment

• Software Development: Your GitHub search o solve a complex computational problem finds incomplete solutions - you seek to create a novel algorithm

• Mechanical Engineering: Experience tells you that the behaviour of materials in a challenging scenario is not well understood - you designing a prototype to test multiple materials

• Engineering Consulting: You believe you can better understand issues observed in the field - you collect data to determine the impact of variables

Why Technological Uncertainty Matters

Technological uncertainty is the driving force behind innovation and the key criteria for SR&ED eligibility. It’s what separates routine improvements from groundbreaking advancements. By identifying, documenting, and working to resolve TU, you not only push the boundaries of what’s possible but also position your business to benefit from SR&ED tax credits. TU isn’t just a hurdle—it’s an opportunity. By embracing and documenting it, you can turn technical challenges into tangible rewards.

Get Started

If your projects involve tackling technical challenges with no clear solutions, you could be eligible for SR&ED tax credits. To find out how much you could qualify for, book a free consultation today!