Scientific Research and Experimental Development Program

What is SR&ED?

The SR&ED Program is administered by the CRA. Companies qualify by demonstrating they are conducting R&D where the outcome is novel, unique and uncertain.

Generally, a Canadian controlled private corporation (“CCPC”) can earn a refundable Investment Tax Credit (“ITC”) at the enhanced rate of 35% on qualified SR&ED expenditures, up to a maximum threshold of $3 million in Eligible Expenses(1). (An “Eligible Expense” is typically the salary of a scientific worker and a proxy currently set at 55% of his or her salary attributed to the SR&ED Program).

Additionally, Provincial Governments offer SR&ED Credits on Eligible Expenses, normally ranging from 10% to 20%(2) with the net result that a typical CCPC involved in high technology development can have 60% of their salaries dedicated to R&D refunded (i.e., $0.60 of each $1 of Eligible Expenses). Companies accrue Eligible Expenses throughout their financial year and thereafter typically take up to 6 months to file their tax return (which includes their claim for SR&ED Credits) and then a further 3-6 months to receive their refund, implying up to a 12-months delay to receive a SR&ED Credit refund, thereby necessitating the need by CCPC’s to borrow against future receipt of a SR&ED Credit refund.

The SR&ED Program provides more than $4 billion in tax incentives to over 30,000 claimants annually, making it the single largest federal program that supports business research and development in Canada(3)(4).

(1) Source:
(2) Source:
(3) Source: Canada Revenue Agency. Overview of the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program. Article RC4472.
(4) Source: Canada Revenue Agency. Privacy Impact Assessment (PIA) summary – Scientific Research and Experimental Development Directorate, Compliance Programs Branch.

The Short Version

SR&ED Scientific Research and Experimental Development Program

The SR&ED Program is a federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (“R&D”) in Canada.