What is SR&ED?
The Scientific Research and
Experimental Development (SR&ED) program is a federal tax incentive program,
administered by the Canada Revenue Agency (CRA) that encourages Canadian
businesses of all sizes and in all sectors to conduct research and development
(R&D) in Canada that will lead to new, improved, or technologically
advanced products or processes. The SR&ED program is the largest single
source of federal government support for industrial research and development.
The SR&ED program gives
claimants cash refunds and/or tax credits for their expenditures on eligible
R&D work done in
Claimants can apply for SR&ED
investment tax credits for expenditures such as wages, materials, machinery,
equipment, some overhead, and SR&ED contracts.
In order for a project to qualify for SR&ED tax credits, you must demonstrate that the project has:
- Advanced the technological knowledge base of the company
- Involved one or more technological obstacles to be resolved
- Incorporated a systematic investigation by qualified personnel having relevant experience in science, technology, or engineering.
Categories of Work that qualifies
for SR&ED tax credits includes:
- Basic Research - Work undertaken to advance scientific knowledge without a specific practical application in view.
- Applied Research - Work undertaken to advance scientific knowledge with a specific application in view.
- Experimental Development - Work undertaken to achieve technological advances for the purpose of creating new, or improving existing, materials, devices, products or procesees, including incremental improvements.
- Support Work - Work that directly supports and is commensurate with the needs of basic research, applied research, and experimental development in the following areas: engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, and psychological research.
Benefits of the SR&ED Program
The SR&ED program is extremely generous. Through
this program, you can earn a refundable tax credit of up to 82% of your R&D
expenditures in the
At the federal level, a Canadian-controlled
private corporation (CCPC) can earn an investment tax credit (ITC) of 35% up to
the first $3 million of qualified expenditures for SR&ED carried out in
Generally, a CCPC with a taxable income in
the immediately preceding year that does not exceed the qualifying income limit may
receive a portion of the ITC earned as a refund, after applying these tax
credits against taxes payable.
The ITC earned by a Canadian corporation that
is not a CCPC is non-refundable, but may be used to reduce any taxes payable.
The ITC earned by a proprietorship or certain trusts may be partially refunded
after applying these tax credits against taxes payable.
At the
There
are also other substantial provincial refunds that we will claim for you
depending on your location. The
following provinces offer SR&ED tax incentives in addition to the federal
SR&ED incentives:
Consult the links below to learn more about the SR&ED tax incentive program:
Scientific
Research and Experimental Development (SR&ED) Tax Incentive Program
Provincial and Territorial Government R&D Programs
SR&ED Eligibility Self-Assessment Tool
http://www.cra-arc.gc.ca/txcrdt/sred-rsde/ssssmnt/menu-eng.html
