The Scientific Research and Experimental Development (SR&ED) Program is a federal and provincial tax incentive that encourages businesses in Canada to invest in research and development. Companies that conduct eligible R&D activities can claim tax credits on qualifying expenses such as employee wages, contractor costs, materials, and certain overhead related to innovation.
Depending on the company’s structure, the program can reduce taxes owed or provide cash refunds on eligible R&D spending. Many Canadian startups and technology companies use SR&ED to help offset development costs and support ongoing innovation.
Criteria:
Eligible activities typically include basic research, applied research, experimental development, and certain support work (engineering, design, data analysis, software development, etc.) that meet the program’s criteria for systematic investigation and technological advancement.
Credit rates vary: federally, many eligible expenditures receive a 15% investment tax credit, with CCPCs often qualifying for higher refundable rates up to around 35% on eligible amounts (subject to federal and provincial rules).
How to apply: claims are filed with the Canada Revenue Agency (CRA) along with a technical narrative, project records, and financial documentation to support the eligible work and costs.
provincial variations exist, so the total benefit can differ by province and company type.
The program aims to reduce the after-tax cost of R&D and to encourage ongoing innovation within Canada.