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What is SR&ED & Who Qualifies?

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What is SR&ED?

SR&ED is an acronym for the Scientific Research and Experimental Development program, which was established by the federal government in the mid-1990’s to assist Canadian companies with financing their research and development initiatives.

On the Canada Revenue Agency web site SR&ED is defined as:

“…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 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 is currently a $3-$5 billion program with no upper limit on the value of claims. It is on track for significant growth.

DOES MY COMPANY’S WORK QUALIFY FOR A SR&ED TAX CREDIT?

  1. Are you a Canadian small business that develops new or improved materials, products and/or processes, in Canada?
     
  2. Do you need to overcome one or more new and/or unexpected technological problems?
     
  3. Is it necessary to conduct trials, experiments or analyses to solve these problems?
     
  4. Do you require expertise or technologies not commonly available to your company to solve these problems?
     
  5. Will successful completion of your work plan result in a technological advancement in your industry or field of science?

If you answered “yes” to the above questions, then you may be eligible to receive SR&ED tax credits!

Even if your attempts prove unsuccessful, you may still qualify. Our experts can show you how to use reports, models, prototypes, test results, logbooks, photographs, or other existing documentation, to help support your claim.


“What Qualifies as SR&ED?”
A quick comparison
Source: Canada Revenue Agency
 

SR&ED

Non-SR&ED

Unknown outcome with absolute risk of technical failure if solution not found

Predictable or unexplored outcome

Experimental

Troubleshooting, trial and error, optimization or known parameters

New concepts

Known concepts

Creates new knowledge/abilities

Accesses existing knowledge/abilities

Solves unusual problems

Solves typical/routine problems

Seeks new knowledge

Uses existing knowledge