SR&ED: Turning Research & Development into Real Returns
The Scientific Research and Experimental Development (SR&ED) program is a federal tax incentive initiative offered by the Government of Canada. It is designed to support and encourage businesses of all sizes and across all sectors to benefit from research and development (R&D) in Canada.
Through SR&ED, companies can recover a portion of their R&D costs in the form of tax credits and/or cash refunds, allowing them to reinvest in innovation, growth, and competitiveness.
When combined with provincial programs, companies can often recover 60%–70% of eligible salaries and other costs.
Why SR&ED Is Important
- Encourages innovation: Helps Canadian businesses remain competitive globally by supporting R&D activities that lead to new products, processes, and technologies.
- Reduces risk of R&D: Developing new technologies and solving scientific or technological challenges can be costly and uncertain—SR&ED provides financial relief.
- Drives economic growth: By incentivizing R&D, the program fosters job creation, talent development, and attracts investment in Canada.
- Widely accessible: Applies across industries—from manufacturing and IT to pharmaceuticals and agriculture—making it one of the most inclusive innovation support programs.
Eligibility in Canada
Who Can Apply?
- Canadian-Controlled Private Corporations (CCPCs).
- Other corporations, partnerships, and sole proprietorships operating in Canada.
Eligible Activities
- Experimental development: Creating or improving materials, devices, products, or processes.
- Applied research: Gaining knowledge with a specific practical application (including salaries and wages of employees directly engaged in R&D).
- Basic research: Advancing scientific understanding without a direct practical application.
- Support work: Engineering, design, testing, or data collection related to eligible R&D.
Benefits of SR&ED
Financial Support
- CCPCs can receive refundable tax credits (cash back even without taxable income).
- Larger corporations can claim non-refundable tax credits to offset current or future tax liabilities.
Generous Credit Rates
- CCPCs may receive up to 35% on qualified expenditures, refunded in cash.
- Other corporations typically receive around 15% as non-refundable ITCs.
Cash Flow Improvement
Refundable credits inject liquidity, helping businesses reinvest quickly in growth and innovation.
Scalable Program
Benefits apply regardless of industry, size, or sector—startups, SMEs, and large enterprises can all take advantage.
Competitive Edge
Enables Canadian companies to keep up with international competition by lowering the cost of innovation.
SR&ED is a cornerstone program for Canadian innovation—reducing financial barriers, rewarding companies for pushing technological boundaries, and strengthening Canada’s global competitiveness.