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The Scientific Research and Experimental Development (SR&ED) program is a federal tax incentive program to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada. The SR&ED program is the largest single source of federal government support for industrial research and development.
Claimants can apply for SR&ED investment tax credits for expenditures such as wages, materials, some overhead, and SR&ED contracts.
Generally, 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 Canada, and 15% on any excess amount. Other Canadian corporations, proprietorships, partnerships, and trusts can earn an ITC of 15% of qualified expenditures for SR&ED carried out in Canada.
To qualify for the SR&ED program, work must generate information that advances the understanding of scientific relations or technologies, and incorporate a systematic investigation or search. It is expected that the work will be performed or directed by qualified individuals.
Work that qualifies for SR$ED tax credits includes:
- experimental development to achieve technological advancement to create new materials, devices, products, or processes, or improve existing ones;
- applied research to advance scientific knowledge with a specific practical application in view;
- basic research to advance scientific knowledge without a specific practical application in view; and
- support work in engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research, but only if the work is commensurate with, and directly supports, the eligible experimental development, or applied or basic research.
For more details and information on how to apply for this credit, visit the Canada Revenue Agency website or contact your tax services office. |
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