Scientific Research and Experimental Development (SR&ED) Tax Incentive Program
Canada
Scientific research and experimental development tax credit
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|timelineUnspecified
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- grant_single|allIndustries
grant_single|grantors
- Canada Revenue Agency (CRA)
- Government of Canada
grant_single|status
grant_card_status|open
grant_single_labels|preview
If your business is engaged in scientific research and experimental development (SR&ED), you can claim a deduction against income or earn an investment tax credit (ITC)
grant_single_labels|terms_and_conditions
The Scientific Research and Experimental Development (SR&ED) Tax Incentive Program provides distinct financing options, focusing on tax incentives that encourage research and development activities within Canada. This approach supports businesses in aligning their eligible research efforts with specific financial benefits.
- Claim a deduction against income through eligible expenditures incurred in SR&ED activities.
- Earn an investment tax credit (ITC), which can be applied towards current or future tax liabilities.
grant_single_labels|projects
The SR&ED Tax Incentive Program supports businesses engaging in scientific research and experimental development in Canada. Projects eligible for this program typically involve innovative research activities aimed at technological advancements or overcoming scientific uncertainties.
- Conducting experimental development to achieve technological advancement.
- Performing applied research to acquire knowledge for a specific practical aim.
- Engaging in basic research to advance scientific understanding without a direct practical application.
- Undertaking support work such as engineering, design, operations research, mathematical analysis, and computer programming related to experimental development.
- Developing prototypes and conducting trials to resolve technological uncertainties.
grant_single|admissibleProjectsExample
$ 300,000
Innovating eco-friendly materials for packaging through experimental development and testing.
$ 280,000
Conducting data analysis and management research to develop smarter logistical systems.
$ 250,000
Developing a new AI algorithm to optimize energy consumption in smart buildings.
$ 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
grant_single_labels|admissibility
Work is eligible for SR&ED tax incentives if it meets both the "Why" and "How" requirements as defined in the Income Tax Act. The work must be conducted for the advancement of scientific knowledge or technological advancement and must follow a systematic investigation or search through experiment or analysis.
- Work must be conducted for the advancement of scientific knowledge or for technological advancement.
- Work must involve resolving scientific or technological uncertainty.
- Systematic investigation or search must be carried out by means of experiment or analysis.
- Basic research: Work undertaken without a specific practical application in view.
- Applied research: Work undertaken with a specific practical application in view.
- Experimental development: Work undertaken to achieve technological advancement to create or improve materials, devices, products, or processes.
- Support work must be directly in support of basic research, applied research, or experimental development and fall under one of these categories: engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research.
- Excluded work includes market research, sales promotion, quality control, routine testing, research in social sciences or humanities, commercial production or use, style changes, and routine data collection.
grant_eligibility_criteria|who_can_apply
Corporations, individuals, trusts, and partnerships in Canada that conduct scientific research and experimental development (SR&ED) may be eligible for SR&ED tax incentives. These entities can claim deductions and earn investment tax credits for their eligible SR&ED work.
- Corporations
- Individuals
- Trusts
- Partnerships
grant_eligibility_criteria|who_cannot_apply
Some types of companies may not be eligible for the Scientific Research and Experimental Development (SR&ED) tax incentives. The eligibility criteria typically exclude companies that do not conduct eligible research and development work in Canada.
- Companies that do not conduct eligible research and development work in Canada
grant_eligibility_criteria|eligible_expenses
Eligible expenses for the SR&ED tax incentives include various types of work performed to achieve scientific and technological advancements. These expenses must be meticulously documented to support your claim.
- Experimental development costs
- Basic research expenditures
- Applied research costs
- Support work expenses (engineering, design, etc.)
grant_eligibility_criteria|zone
This program is designed to support R&D activities across Canada without specifying particular eligible regions or provinces. While the program is broadly accessible, participants must ensure their activities comply with national guidelines.
grant_single_labels|criteria
The evaluation and selection criteria for the Scientific Research and Experimental Development (SR&ED) tax incentives emphasize scientific or technological advancement and a systematic approach to the work. Ensure that your work meets the "Why" and "How" requirements to be eligible.
- 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.
grant_single_labels|register
- Step 1: Identify eligible work
- Determine if your work is conducted for the advancement of scientific knowledge or technological advancement.
- Ensure your work involves systematic investigation or search carried out in a field of science or technology by means of experiment or analysis.
- Step 2: Group eligible work into a project
- Describe the SR&ED work and include the advancement achieved through the project.
- Separate eligible work from other activities, ensuring it aligns with SR&ED definitions and requirements.
- Step 3: Calculate SR&ED expenditures
- Identify and calculate all allowable SR&ED expenditures incurred in the year.
- Understand how other government R&D funding impacts your eligible expenditures.
- Step 4: Claim a deduction and earn an investment tax credit (ITC)
- File your claim together with your income tax return for the year.
- Ensure you follow provincial and territorial tax credit regulations as they impact your SR&ED claim.
- Step 5: Keep supporting documentation
- Document all work conducted, who performed it, and when it was done.
- Keep evidence generated during the work and supporting financial records.
- Step 6: Involve senior technical and financial personnel
- Engage staff with in-depth knowledge of SR&ED work and company financial records.
- This ensures the claim's accuracy and completeness.
- Step 7: Submit your claim before the deadline
- Know your SR&ED reporting deadlines based on your tax identification (corporation, trust, individual).
- Submit your claim early to avoid missing the deadline and avoid any changes after the deadline.
grant_single_labels|otherInfo
The guidelines outline the specifics on Scientific Research & Experimental Development (SR&ED) tax incentives, offering clarity on eligibility requirements and steps for claiming deductions. They stress the importance of proper documentation to support SR&ED claims and provide a comprehensive breakdown of eligible and ineligible work.
- Basic research aims to advance scientific knowledge without specific practical applications.
- Applied research is directed towards scientific knowledge with practical applications in view.
- Experimental development focuses on technological advancements for new or improved products, devices, or processes.
- Support work includes engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, and psychological research.
- Excluded work includes market research, quality control, routine testing, social sciences research, prospecting for natural resources, commercial production or use of new/improved products and processes, style changes, and routine data collection.
- Proper documentation must show what work was done, who did it, when it was done, and how expenditures were calculated.
- SR&ED claims should be filed together with the income tax return for the year and must be submitted before the reporting deadline.
- Other government funding for R&D must be reported in the SR&ED claim and will reduce the amount of ITC you can earn.
grant_single_labels|contact
sredclprtlg@cra-arc.gc.ca
