One of the most generous tax incentive programs, the SR&ED Tax Credit is Canada’s leading single source of Federal Government support for research and development.

The SR&ED Program provides more than $3 billion in tax incentives to over 20,000 claimants annually, making it the single largest federal program that supports business research and development (R&D) in Canada. The program is administered by the Canada Revenue Agency (CRA). Of this amount, over 70% of refunds are directed towards small to medium sized businesses.

Frequently Asked Questions

What types of businesses qualify?

  • Canadian Controlled Private Corporations
  • Canadian Proprietorships
  • Canadian Partnerships
  • Canadian Trust Companies
  • Other Canadian Corporations (International Companies)

What work qualifies for SR&ED tax incentives?

Determining SR&ED Eligibility:

  1. “Was there a scientific or a technological uncertainty that could not be removed by standard practice/engineering?”
  2. “Did the effort involve formulating a hypothesis specifically aimed at reducing or eliminating the uncertainty?”
  3. “Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypothesis?”
  4. “Did the process result in a scientific or technological advancement?”
  5. “Was a record of the hypothesis tested and results kept as the work progressed?”

What is the definition of SR&ED?

“Scientific research and experimental development” means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis and that is:

(a) basic research, namely work undertaken for the advancement of scientific knowledge without a specific practical application in view;

(b) applied research, namely work undertaken for the advancement of scientific knowledge with a specific practical application in view; or

(c) experimental development, namely, work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto;

and, in applying this definition in respect of a taxpayer, includes:

(d) work undertaken by or on behalf of the taxpayer with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing or psychological research, where the work is commensurate with the needs, and directly in support, of work described in paragraph (a), (b), or (c) that is undertaken in Canada by or on behalf of the taxpayer,

but does not include work with respect to:

(e) market research or sales promotion;

(f) quality control or routine testing of materials, devices, products or processes;

(g) research in the social sciences or the humanities;

(h) prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas;

(i) the commercial production of a new or improved material, device or product or the commercial use of a new or improved process;

(j) style changes; or

(k) routine data collection.