About the SR&ED
What Is It?
SR&ED stands for Scientific Research and
The SR&ED program is a tax incentive program
available to Canadian businesses that are involved
in research and development.
How Much Is Available?
Each year, the SR&ED program
provides over $4 billion to
Canadian businesses and
organizations in the form of
investment tax credits.
Approximately 75 percent of
the organizations that apply
for the credit are small
businesses, and countless
businesses that are eligible for
the program don’t even bother
Basically, any business or
organization that conducts
R&D inside Canada may
qualify for the program.
However, not every action
that seems like R&D is
actually SR&ED. The
Canada Income Tax Act
outlines what types of
research qualify and what
types don’t make the cut.
These Are Considered SR&ED
Basic research that’s designed to advance scientific
knowledge without a specific practical application.
Experimental development that’s designed to achieve
technological advancement by creating materials, products
Applied research that’s designed to advance scientific
knowledge and does have a specific practical application.
More SR&ED Qualified Work
Support work or research that falls into one of
the following categories may also qualify:
These Are Not Considered SR&ED
Basic quality control.
Routine material, product, device and process
Standard market research or sales promotion.
Social science research.
Basic data collection.
Commercial production or use of new or improved
devices, materials, products or processes.
Drilling, exploring or prospecting for natural gas,
petroleum or minerals.
The Reason for the Program
The Canada Revenue
Agency (CRA) created
the program to act as
an incentive for
different businesses to
The hope is for
Canadian businesses to
be at the forefront of
advances in many
How to Apply
To apply for the SR&ED tax credit, you
must send in the appropriate forms with
your income tax return. First, you need
form T661, then for a corporation, you
also need to send a T2SCH31. For
individuals the extra form is T2038.
Starting from the end of the tax year that the
expenses were incurred, corporations have 18
months to file and individuals have 17.5
Expenditures to Include
If your specific research meets the criteria, you can include
the following expenditures.
Salaries and wages
Leasing equipment expenses
Claims are usually processed between 120 and 365 days after they
are received by the CRA.
When filing a claim for SR&ED credit, sending the
following information may help speed up the
Financial or technical documents that pertain to
Contact information of a technical person and
financial person in the organization that’s familiar
with the research and expenditures.
It’s also wise to respond as fast as possible to any
requests for more information.
SR&ED One Canada is an economics development
program that offers support to businesses that
have a problems to solve. Visit us today at
http://www.sredone.ca/ to learn more.