SR&ED Tax Credit

The Scientific Research & Experimental Development (SR&ED) Program, administered by the Canada Revenue Agency (CRA), allocates over $3 billion annually to more than 20,000 claimants, making it Canada’s most substantial federal incentive for business research and development (R&D). If your company is investing in innovation, ensuring you maximize this opportunity is essential.

Canada’s SR&ED Program

Tthe SR&ED program has played a key role in fueling technological advancement

Providing Generous Tax Incentives

Businesses receive significant tax credits, refunds, or deductions based on their R&D expenditures.

Encouraging Industry Innovation

Supports businesses in exploring new technological frontiers.

Boosting Economic Growth

Drives Canada’s GDP by incentivizing local innovation, and technological advancement.

Latest SR&ED Updates

The Canadian government has introduced key enhancements to the SR&ED tax credit program, making it even more beneficial for companies investing in R&D:
Higher Refundable Limits – The 35% enhanced refundable tax credit now applies to up to $4.5 million in qualifying expenditures (previously $3 million), allowing Canadian-Controlled Private Corporations (CCPCs) to claim up to $1.575 million annually in refundable credits.
Expanded Phase-Out Thresholds – The taxable capital limits have increased:
  • Lower threshold: Increased from $10 million to $15 million
  • Upper threshold: Increased from $50 million to $75 million
Extended Eligibility for Public Corporations – Eligible public corporations can now claim the 35% refundable tax credit on up to $4.5 million in qualifying SR&ED expenditures per year.
Capital Expenditures Reinstated – Infrastructure, equipment, and machinery are now eligible for deductions and investment tax credits. This applies to property acquired and lease costs incurred after the 2024 Fall Economic Statement.
Effective Date – The new SR&ED program rules apply to taxation years beginning on or after December 16, 2024. Now is the time to align your SR&ED strategy to maximize your claims.

What R&D Activities Qualify for SR&ED?

The SR&ED program rewards companies conducting scientific research and experimental development that meets one or more of the following criteria:

Innovation

Developing new products, processes, or methodologies previously unavailable in the market.

Improvement

Enhancing the performance, efficiency, or reliability of existing technologies.

Exploration

Engaging in scientific or technological experimentation to resolve uncertainties.

Benefit the Most from SR&ED

Top Industries

Aerospace

Advance cutting-edge technology and drive aerospace innovation.

Manufacturing

Improve production processes, automation, and sustainable development.

Chemistry

Support research breakthroughs in materials science and chemical engineering.

Life Sciences

Fuel biotech and pharmaceutical advancements with targeted tax incentives.

Information & Communication Technology (IT)

Secure funding for AI, cybersecurity, and software development.

How Can the SR&ED Tax Credit Leverage Your Business?

Boost Your Cash Flow

Claim refundable credits to reinvest in your business.

Fuel Innovation

Allocate more resources to R&D and stay ahead of competitors.

Accelerate Business Growth

Attract investors with strong R&D incentives.

Increase Competitiveness

Use tax credits to optimize pricing, marketing, and product development.

Claiming SR&ED: The Two Methods

Businesses can choose between two primary methods for claiming SR&ED tax credits:
Calculates incremental overhead expenses and adds them to eligible SR&ED costs.
Best for companies with significant R&D investments across multiple cost categories.
Allows businesses to claim 55% of direct SR&ED salaries as overhead expenses.
Best for companies focusing on R&D salaries but without major additional expenses.
How do CCPCs and non-CCPCs receive SR&ED tax credits?
The refundability of tax credits depends on the company structure. CCPCs can claim fully refundable credits, while non-CCPCs may have non-refundable credits applied against taxes payable.
SR&ED eligibility depends on whether the work involves technological advancement, systematic investigation, and uncertainty resolution.
Gather detailed documentation, including project records, technical reports, and financial data to support your claim.
If selected for review, the CRA will assess your documentation and R&D activities. Proper documentation increases the likelihood of approval.
We guide businesses through claim preparation, documentation, and submission, ensuring maximum tax credit recovery.
Activities such as data collection, software development, engineering, and experimental testing may qualify.

FAQs

Everything You Need to Know About SR&ED Tax Credit