Scientific Research and Experimental Development (SR&ED)

• Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim (current version)
• Schedule T2SCH31 (corporations) or Form T2038(IND) (individuals) to claim the Investment Tax Credit (ITC)
• Supporting records (technical and financial) that substantiate the SR&ED work performed and the related expenditures claimed

Who is eligible?

• 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

Who is not eligible

• 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.

Eligible expenses

• 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.

Ineligible Costs and Activities

• Market research or sales promotion
• Quality control or routine testing of materials, devices, products, or processes
• Research in the social sciences or the humanities
• Commercial production of a new or improved product/material, or commercial use of a new or improved process
• Training or on-the-job learning to apply existing knowledge (including hiring experts for what they already know, or purchasing proprietary knowledge)

Eligible geographic areas

• Canada (eligible SR&ED work must be conducted in Canada).

• CRA generally processes a completed SR&ED claim within 60 calendar days after receiving the completed claim and the income tax return (refundable claims selected for review are generally completed within 180 calendar days).
• The CRA may contact you if your claim is incomplete and request missing information; you must provide it before the SR&ED reporting deadline (after the deadline, additional information is not accepted and SR&ED expenditures and related ITC may be lost).
• Some claims are selected for review to gather more information about the SR&ED work and/or expenditures (the CRA may request supporting records and may hold an on-site or virtual meeting with your senior technical and financial personnel).
• If accepted as filed, the CRA will notify you on your Notice of assessment or reassessment (a review may result in adjustments and the CRA will provide a report outlining the outcome).
• If you disagree with the CRA’s decision, you may file an objection within 90 days of the date of your Notice of assessment or reassessment; if you do not agree with the objection decision, you may then file an appeal.

• 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.