Scientific Research and Experimental Development (SR&ED)
Eligibility & Details
What this program funds and who can apply
Program Description
Federal tax incentive program that encourages Canadian businesses to conduct research and development in Canada.
Eligibility Requirements
- Canadian business conducting qualifying R&D activities (technological uncertainty, systematic investigation, technological advancement)
- Must be filing Canadian corporate or business taxes and reporting income in Canada
- R&D work performed in Canada
- Claim filed within 18 months of fiscal year-end (absolute deadline, no extensions)
- Contemporaneous technical documentation maintained throughout the R&D project
- For the enhanced 35% refundable rate: must be a Canadian-Controlled Private Corporation (CCPC) with taxable income under $800K and taxable capital under $50M
Quick Assessment
Funding Details
- Amount
- Up to 35% refundable ITC (enhanced rate for CCPCs on first $6M); 15% non-refundable for others. Combined federal+provincial can exceed 50%.
- Type
- Tax Credit
- Level
- Federal
- Co-Funding
- Up to 35% of eligible costs
- Deadline
- Ongoing
Program Scorecard
Competition, effort, and approval at a glance
See how this program compares on approval odds, difficulty, and competition — so you know if it’s worth your time. Unlock with Premium →
How to Win
Insider tips, common pitfalls, and what successful applicants look like
Insider TipDocument as you go — CRA's single biggest audit trigger is reconstructed-after-the-fact documentation. Keep weekly or biweekly technical logs during the project, not at year-end. Second: most denied claims fail on the technical narrative in Form T661, not the financials. Use CRA's five-question framework explicitly in your project descriptions. Third: consider the new voluntary pre-claim approval process (launching April 2026) for large or novel projects — 90-day turnaround gives certainty before you invest in full claim preparation. Finally: hire a consultant for your first 1-2 claims but learn the process — many companies switch to in-house preparation after building internal expertise, saving 15-20% in consultant fees.
See what trips up most applicants for this program — and how to avoid it. Unlock with Premium →
Rejection Pitfalls 8
- Work described as routine engineering or standard practice rather than addressing a genuine technological uncertainty
- Vague, generic, or boilerplate technical descriptions in Form T661 — failing to articulate specific hypotheses and experiments
- Lack of contemporaneous documentation — records created retroactively or insufficient to support claimed hours/activities
See the most common reasons applications get rejected — before you submit yours. Unlock with Premium →
Success Profile
Software companies and tech startups benefit most — software development accounts for 40.8% of all ITCs allowed. Ideal claimant is a CCPC with under $500K taxable income and under $15M taxable capital (qualifies for full enhanced rate), employing 3-20 developers/engineers who spend at least 30-50% of their time on eligible R&D. Companies in manufacturing, medical devices, biotech, and clean technology are also strong fits. First-time claimants with good documentation often succeed — 90% acceptance rate.
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Evaluation Criteria
SR&ED is an entitlement program — not scored competitively. CRA evaluates claims against the five-question eligibility framework: (1) Was there a technological uncertainty? (2) Did the work involve a systematic investigation? (3) Was there a technological advancement? (4) What was the technological content? (5) Was the work related to the business? Claims are either accepted or denied based on meeting these criteria. 90% are accepted as filed.
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Application Playbook
Step-by-step process, required documents, and expenses
Application Steps
Required Documents 9
Eligible Expenses 6
- Salaries and wages of employees directly performing SR&ED work, including employer contributions (CPP, EI, health taxes)
- Materials consumed or transformed during R&D experimentation (prototypes not sold commercially)
- Subcontractor payments at 80% of arm's-length costs for SR&ED performed in Canada
- Overhead via proxy method — 55% of eligible salaries automatically covers rent, utilities, and shared equipment
- Capital expenditures for equipment acquired after December 16, 2024, used 90% or more for SR&ED activities (new for Budget 2025)
- Third-party payments to universities, colleges, and approved research institutes
Ineligible Expenses 7
- Materials used in commercial production or sold commercially
- Subcontractor payments to non-arm's-length parties without proper documentation
- Equipment used for both R&D and production (unless 90%+ R&D use)
- General office equipment, furniture, and vehicles (except specialized R&D vehicles)
- Building and leasehold improvement costs
- Market research, sales, and marketing activities
- Quality control and routine testing not connected to resolving technological uncertainty
Intake Periods
Continuous — claims can be filed at any time within the 18-month deadline after fiscal year-end. No intake windows or competition rounds. Filing with the T2 return (6 months after year-end) is recommended for fastest processing.
Deadline Notes
This is an absolute deadline with no extensions. Strategic tip: file as early as possible — claims filed with the T2 return (6 months after year-end) are processed fastest. Late claims (close to the 18-month deadline) still qualify but face longer queues. The new 45-day processing target (effective April 2026) applies only to timely, non-reviewed refundable claims.
Open Application Portal →Ineligible Organizations
- Tax-exempt entities (registered charities, most non-profit organizations) — though taxable subsidiaries may claim
- Organizations not conducting business in Canada
- Businesses performing R&D work entirely outside Canada
Get the step-by-step application guide — documents, timeline, and what to prepare. Unlock with Premium →
Funding Stack Strategy
Compatible programs, clawback risk, and combined funding potential
Compatible Programs
Clawback Risk
Low RiskSee which programs combine with this one — and how much more you could get. Unlock with Premium →
How Scientific Research and Exp... Compares
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