What is the SR&ED Program?
The Scientific Research and Experimental Development (SR&ED) program is the Canadian government’s largest single source of support for industrial research and development. Administered by the Canada Revenue Agency (CRA), the program provides over $3 billion annually in tax incentives to Canadian businesses.
The program encourages businesses of all sizes and in all sectors to conduct R&D that will lead to new, improved, or technologically advanced products, processes, or services.
Eligible businesses can claim both federal and provincial tax credits, with combined rates reaching up to 64% of qualifying expenditures for Canadian-controlled private corporations (CCPCs).
CCPCs can receive refundable tax credits of up to 35% federally, plus additional provincial credits, even if they have no taxable income.
Federal Credits
On first $3M of qualifying expenditures
Ontario Provincial Credits
- Rates are subject to change. Other provinces offer additional credits. Contact us for current rates applicable to your situation.
What Activities Qualify?
SR&ED eligible work must meet three criteria: technological uncertainty, systematic investigation, and technological advancement.
Technological Uncertainty
The work must address a technological problem that cannot be resolved through standard practice or routine engineering.
Systematic Investigation
A systematic approach involving hypothesis, testing, and analysis must be used to resolve the uncertainty.
Technological Advancement
The work must aim to achieve a technological advancement—new knowledge that advances the understanding of technology.
✓ Developing new software algorithms or architectures
✓ Designing and prototyping new products
✓ Developing new materials or formulations
✓ Overcoming technical integration challenges
✓ Experimental development and testing
✕ Market research and sales promotion
✕ Routine quality control and testing
✕ Style changes and aesthetic design
✕ Commercial production and operations
✕ Social sciences and humanities research
Salaries & Wages
Compensation for employees directly engaged in or directly supervising SR&ED activities.
Materials
Cost of materials consumed or transformed in the prosecution of SR&ED.
Contracts
Payments to arm’s length contractors for SR&ED performed on your behalf in Canada.
Overhead
Proxy amount or actual overhead costs related to SR&ED activities.
Comprehensive Claim Support
Canadian Funding Partners helps businesses identify funding opportunities and coordinate applications with specialist partner firms. Where a file requires accounting or engineering expertise, the work is handled by appropriately qualified professionals at our partner firms.
Eligibility Assessment
We conduct a thorough review of your R&D activities to identify all projects that may qualify for SR&ED credits, including activities you may not have considered eligible.
Technical Documentation
Technical specialists at our partner firms prepare detailed project descriptions that clearly articulate technological uncertainties, systematic investigation, and advancements achieved.
Financial Analysis
Qualified accounting professionals at our partner firms work with your financial team to calculate eligible expenditures, ensuring qualifying costs are captured in compliance with CRA requirements.
Claim Preparation & Filing
We coordinate complete claim packages including Form T661, technical narratives, and supporting schedules, coordinating with your tax preparer to ensure proper integration with your tax return.
CRA Liaison
We coordinate communication with the CRA, responding to queries and providing additional information as required to support your claim.
Review Support
If your claim is selected for review, our partner firms provide documentation support to substantiate your filing throughout the process.
Initial Consultation
We meet with your team to understand your business, R&D activities, and objectives.
Project Interviews
We conduct technical interviews with your R&D staff to gather project details.
Documentation & Analysis
We prepare technical narratives and calculate eligible expenditures.
Review & Submission
You review the claim, we finalize and submit to CRA with your tax return.
CRA Processing
We track your claim and respond to any CRA inquiries on your behalf.
Frequently Asked Questions
No. One of the significant benefits of SR&ED for Canadian-controlled private corporations (CCPCs) is that the investment tax credits are refundable. This means you can receive cash refunds even if your company has no taxable income. For non-CCPCs, the credits are non-refundable but can be carried back 3 years or forward 20 years.
SR&ED is not limited to specific industries. Any business conducting qualifying R&D activities in Canada may be eligible, including software development, manufacturing, engineering, life sciences, clean technology, food processing, and many others. The key is the nature of the work, not the industry.
Yes. You can file SR&ED claims for up to 18 months after the end of your fiscal year. If you’ve been conducting R&D activities but haven’t claimed SR&ED, you may be able to submit claims for prior periods. Contact us to discuss your specific situation.
CRA reviews a portion of SR&ED claims each year. If your claim is selected, Canadian Funding Partners coordinates documentation and technical support through our partner firms. We organize all documentation and assist in substantiating the filing throughout the review process.
We typically work on a contingency basis, meaning our fee is a percentage of the credits we help you recover. This aligns our interests with yours and means there’s no upfront cost. The specific percentage depends on claim complexity and size. We’ll provide a clear fee proposal after our initial assessment.
Contact us for a complimentary consultation. We’ll assess your R&D activities and provide a clear picture of your potential benefit.
Frequently asked questions
What is the SR&ED tax credit?
The Scientific Research and Experimental Development (SR&ED) program is the federal government’s R&D incentive, administered by the Canada Revenue Agency. It provides investment tax credits on eligible salaries, materials, contract work and overhead spent on experimental development, applied research or basic research carried out in Canada.
What SR&ED rate applies to my company?
A Canadian-controlled private corporation (CCPC) can earn a 35% refundable federal investment tax credit on its first $3 million of qualified SR&ED expenditures. Expenditures above that threshold, and claims by other corporations, earn the 15% federal rate, which is generally non-refundable.
Which activities qualify as SR&ED?
Work qualifies when it seeks to resolve a scientific or technological uncertainty through systematic investigation — hypothesis, experiment, analysis and documented conclusion. Routine engineering, quality control, market research and style changes do not qualify on their own, but directly supporting work can be claimed alongside eligible experimental work.
When is the SR&ED filing deadline?
A corporation must file its SR&ED claim, including the prescribed forms, no later than 12 months after the filing due date of its income tax return for the year — in practice 18 months after the fiscal year end. The deadline is statutory, so late claims are not accepted.
Can SR&ED be combined with provincial credits and grants?
Yes. Several provinces offer their own R&D credits that stack on top of the federal ITC, and grant funding can often be combined, although government assistance reduces the qualified expenditure pool. The interaction is assessed file by file.