How much funding can be received?

Funds up to 35% of admissible expenses.

What is the deadline to apply?

The deadline to apply is not specified.

Scientific Research and Experimental Development (SR&ED) — Tax Incentive Program

Q: What are Scientific Research and Experimental Development (SR&ED) — Tax Incentive Program's eligibility criterias?

The applicant must conduct eligible scientific research and experimental development work. The applicant can be a corporation, individual, trust, or partnership operating in Canada. The work must be linked to specific expenditures claimable for SR&ED tax incentives.

grant_single|update April 20, 2025

Canada

Scientific research and experimental development tax credit

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Tax Credits

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Canada Revenue Agency (CRA)
Government of Canada

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The Scientific Research and Experimental Development (SR&ED) Tax Incentive Program offers Canadian businesses deductions and investment tax credits of up to 35% of eligible R&D expenditures to encourage innovation. The program supports basic research, applied research, and experimental development carried out in Canada for scientific or technological advancement.

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Businesses may earn an investment tax credit (ITC) at a basic rate of 15% of qualified SR&ED expenditures.
Certain corporations may claim an enhanced ITC at a rate of 35% on eligible expenditures.
Some businesses may be eligible for a refundable ITC, reducing their income tax payable for the year.

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Basic research aimed at advancing scientific knowledge without a practical application in view.
Applied research conducted to advance scientific knowledge with a practical application in view.
Experimental development to generate or discover technological knowledge or know-how in order to develop or improve materials, devices, products, or processes, including incremental improvements.
Support work directly supporting eligible basic research, applied research, or experimental development, in the fields of engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research.

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$ 300,000

Innovating eco-friendly materials for packaging through experimental development and testing.

$ 250,000

Developing a new AI algorithm to optimize energy consumption in smart buildings.

$ 280,000

Conducting data analysis and management research to develop smarter logistical systems.

$ 240,000

Exploring new composite materials for sustainable packaging

$ 240,000

Enhancing precision agriculture through robotics integrations

$ 240,000

Developing AI-based diagnostic tool for neurological disorders

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The applicant can be a corporation, individual, trust, or partnership conducting eligible scientific research and experimental development (SR&ED) work in Canada.
The work must be conducted in Canada.
The work must aim for the advancement of scientific knowledge or technological advancement.
The work must be a systematic investigation or search carried out in a field of science or technology by means of experiment or analysis.
Eligible work categories include basic research, applied research, experimental development, and qualified support work (such as engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research) that directly support SR&ED.
The applicant must link eligible work to claimable SR&ED expenditures.
The application must be made via submitting the required SR&ED claim forms with the income tax return for the year.

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Corporations conducting scientific research and experimental development in Canada
Individuals involved in eligible SR&ED work
Trusts engaging in eligible SR&ED activities
Partnerships that carry out SR&ED work

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Companies or entities whose main activities are market research or sales promotion.
Companies engaged primarily in quality control or routine testing of materials, devices, products, or processes.
Organizations whose core business is research in the social sciences or the humanities.
Businesses involved in prospecting, exploring, drilling for, or producing minerals, petroleum, or natural gas.
Companies focused on the commercial production of a new or improved material, device, or product, or the commercial use of a new or improved process.
Entities whose primary work relates to style changes or routine data collection.

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Salaries or wages of personnel engaged in eligible SR&ED activities.
Materials consumed or transformed during eligible SR&ED work.
Contract expenditures for work performed on eligible SR&ED activities.
Overhead and other expenditures related to eligible SR&ED projects, as calculated by the proxy or traditional method.
Third-party payments directly supporting eligible SR&ED work.

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Businesses conducting eligible scientific research and experimental development work in Canada.

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Work performed for the advancement of science or technological progress.
Presence of scientific or technological uncertainty that justifies the work.
The work must be conducted through a systematic scientific or technological investigation or research, carried out through experimentation or analysis.
Categories of eligible work: experimental development, pure research, applied research.
Supporting work must be proportional to the needs and directly support the SR&ED.
Exclusion of work related to market studies, routine quality control, research in social or human sciences, prospecting, commercial production, style modifications, and routine data collection.

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Check your work eligibility

Determine if your business activities meet the definition of SR&ED in the Income Tax Act
Assess the eligibility of your research or experimental development work
Ensure your work addresses scientific or technological uncertainty

Gather supporting documentation

Collect supporting documentation as your project progresses
Keep records of hypotheses, experiments, results, and conclusions
Maintain detailed records of expenditures and eligible activities

Organize work into SR&ED projects

Group eligible work into distinct SR&ED projects
Link each project to the related expenditures
Identify basic research, applied research, and experimental development components

Report eligible expenditures

Report all eligible expenditures using form T661
Select either the proxy or traditional method to calculate expenses
Include expenditures for salaries, materials, contracts, and third-party payments

Calculate deductible and qualified expenditures

Calculate your pool of deductible SR&ED expenditures
Determine which expenses can be claimed as deductions
Establish the expenditures that qualify for the investment tax credit (ITC)

Complete and review all forms

Prepare and complete all required forms: T661, T2SCH31 or T2038(IND), and any relevant attachments
Ensure all information is accurate and supported by documentation
Review all entries before finalizing your application

Submit your SR&ED claim

Submit your SR&ED claim with your annual income tax return or as an amendment
Submit electronically using filing software or by mail, depending on your taxpayer status
Respect all reporting deadlines based on your type of entity (corporation, trust, individual)

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The SR&ED Client Portal, available through My Business Account, provides a secure workspace for managing claims.
Investment tax credits (ITC) can be allocated among eligible partners within a partnership.
Other government R&D funding received (e.g., NRC IRAP) must be reported and will reduce your ITC amount but does not disqualify eligibility.
Support such as webinars, pre-claim consultations, and outreach presentations is available to assist applicants in understanding and navigating the SR&ED program.