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What is SR&ED?
Scientific Research and Experimental Development (SR&ED) is Canada's largest tax incentive program, providing over $4.5 billion annually to companies investing in research and development. If your business solves technical problems, you're likely eligible.
$4.5B
Distributed annually
in investment tax credits
22,700+
Claims processed
each fiscal year
90%
Accepted as filed
without modification
58%
Refundable credits
cash back to businesses
Source: CRA Annual SR&ED Program Statistics, Fiscal Year 2024–2025
The Basics
How the program works
The SR&ED program provides investment tax credits (ITCs) to Canadian businesses that conduct qualifying research and development. The work must involve technological uncertainty — you don't know if something is technically achievable or how to achieve it — and the resolution must come through systematic investigation in a field of science or technology.
Claims are filed using CRA Form T661 and must be submitted within 18 months of your fiscal year-end. For CCPCs (Canadian-controlled private corporations), the enhanced rate of 35% applies to the first $6 million of qualifying expenditures — up to $2.1 million in annual refundable credits.
Key distinction
SR&ED credits are not a grant — they're a tax credit. For qualifying CCPCs, credits are fully refundable, meaning you receive cash even if you have no taxes payable.
Eligible expenditures
Wages & Salaries
~64%Salaries of employees directly engaged in SR&ED. Typically the largest component of any claim.
Contractors
~33%Payments to arm's-length Canadian contractors performing SR&ED work on your behalf.
Materials
~40%Raw materials and supplies consumed or transformed during the SR&ED process.
Overheads
~55%Overhead expenses allocated to SR&ED using the proxy method or traditional method.
Combined federal + provincial rates for qualifying CCPCs. Rates vary by province and tax situation.
By the Numbers
Where the $4.5 billion goes
Software and IT companies claim the biggest slice, but nearly 60% of credits go to other industries. If your team does R&D in Canada, there's probably money here for you.
CRA Fiscal Year 2024–2025. Amounts based on $4.5B total ITCs allowed.
64%
of claims come from small businesses with under $4M in revenue
$207K
Average ITC per applicant across all business sizes
~20%
of claims are selected for audit by CRA each year
3%
of claims come from large companies, yet they receive 24% of credits
Audit readiness matters
With 1 in 5 claims audited, having a consultant who can defend your claim isn't a luxury — it's a necessity. Learn about our approach →
Historic SR&ED program expansion
The 2025 Federal Budget introduced the most significant enhancements to the SR&ED program in over a decade, Translation: $1.9 billion more for Canadian R&D companies over the next six years.
Expenditure limit doubled
The enhanced 35% rate now applies to up to $6 million in annual qualifying expenditures, doubling the previous $3M limit.
Max refundable credit raised
Qualifying CCPCs can now receive up to $2.1 million in annual refundable tax credits — real cash back to fund your R&D.
Capital costs restored
Capital expenditures are once again eligible for both SR&ED deductions and ITCs, with 40% partial refundability for qualifying CCPCs.
Public companies now eligible
Eligible Canadian public corporations can now access the enhanced 35% ITC rate for the first time in the program's history.
Higher phase-out thresholds
The taxable capital range for reducing the enhanced rate has been widened, so more mid-sized companies can access full benefits.
Pre-claim approval process
Starting April 2026, an elective pre-claim process provides upfront technical validation, cutting wait times in half.
Effective for taxation years beginning after December 15, 2024. Source: 2025 Federal Budget.
Provincial Credits
Then stack provincial credits on top
Most provinces add their own SR&ED credits on top of the federal program. In Quebec, combined rates can exceed 60%.
| Province | Rate | Type | Notes |
|---|---|---|---|
| Alberta | 20% | Refundable | On eligible SR&ED expenditures |
| British Columbia | 10% | Refundable | Refundable for CCPCs on eligible expenditures |
| Ontario | 8–20% | Refundable / Non-refundable | 8% OITC (refundable for SMEs) + up to 20% ORDTC (non-refundable) |
| Quebec | 14–30% | Refundable | Based on company size |
| Manitoba | 15% | Refundable | On eligible expenditures |
| Saskatchewan | 10% | Refundable | Refundable up to annual limits for eligible corporations |
| New Brunswick | 15% | Refundable | On eligible expenditures |
| Nova Scotia | 15% | Refundable | On eligible expenditures |
Rates shown are for the provincial SR&ED tax credit component. Provinces without listed programs (PEI, NL, territories) may still participate in the federal program. Quebec leads all provinces, accounting for nearly 40% of total SR&ED credits issued.
Program History
From $1.8B to $4.5B in twenty years
The program has more than doubled. Canada is betting bigger on R&D every decade.
2005–2010
Rapid expansion
The program grew from $1.8B to $4B as awareness increased. Claimants peaked at 28,518 in 2009–2010, the highest ever recorded.
2012–2020
Policy adjustments
The 2012 Budget removed capital expenditures and reduced overhead rates, temporarily decreasing total credits. The program stabilized around $3B annually during this period.
2020–Present
Record levels
A 43% surge in 2020–2021 brought credits to $4.3B. The 2025 Budget's historic expansion — restoring capital costs and doubling limits — signals a new era of support.
Eligibility
Does your work qualify?
If your team hit a technical wall and had to experiment to get past it, you're probably looking at SR&ED. Here's the formal test.
The three-part test
Technological uncertainty
You faced a problem that couldn't be solved using standard practice or publicly available knowledge. You didn't know if it was achievable, or how to achieve it.
Systematic investigation
You followed a methodical approach — forming hypotheses, testing them, analyzing results, and iterating. This is what separates R&D from routine development.
Technological advancement
Your work generated new knowledge or understanding, whether it succeeded or failed. The advancement doesn't need to be patentable — it just needs to push the state of the art.
Industries that typically qualify
Not sure if your work qualifies? We offer free eligibility assessments.
Most companies that ask us “do we qualify?” do.
One conversation is usually enough to find out. We'll review your R&D and tell you exactly what we'd claim — no charge, no obligation.
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