The Difference Between Technical and Technological Uncertainties

Uncertainties

In the context of SR&ED (Scientific Research and Experimental Development) consulting and documentation, distinguishing between "technical uncertainties" and "technological uncertainties" is crucial, as these terms carry significant implications for SR&ED eligibility and claims.

Technical Uncertainties: These typically refer to challenges or unknowns encountered when applying existing knowledge or methods. Resolving technical uncertainties often involves using known techniques or standard practices. For SR&ED purposes, a technical uncertainty might not qualify as a scientific or technological uncertainty unless it necessitates experimental development or research for resolution. For instance, optimizing a manufacturing process using established methods might present a technical uncertainty but may not inherently involve scientific or technological uncertainties.

Notably, studies conducted during commercial production runs are considered a blend of experimental development and commercial production (DE+EP), highlighting the practical aspect of addressing technical uncertainties.

Technological Uncertainties: These are challenges that cannot be resolved by applying known methods or techniques and typically require experimental development, research, or innovation to address. Technological uncertainties involve unknowns that cannot be resolved without conducting experiments or analyses. In the SR&ED context, technological uncertainties are pivotal, as they indicate the presence of scientific or technological unknowns that a company has strived to overcome through systematic investigation or search. Examples include developing new material with properties unachievable with current knowledge or creating an innovative software algorithm where existing ones are inadequate.

For effective SR&ED documentation, focusing on technological uncertainties is essential. This involves:

1. Clearly articulating the scientific or technological uncertainties you attempted to overcome, aligning with the nature of technological uncertainties.
2. Describing the work performed during the tax year to overcome these uncertainties, emphasizing the experimental or innovative aspects.
3. Outlining the scientific or technological advancements achieved as a result of this work.

Remember, the distinction between technical and technological uncertainties is vital because SR&ED tax incentives are designed to encourage businesses to undertake scientific research and experimental development that pushes boundaries and solves problems beyond the scope of current knowledge or standard practices.