How an SR&ED claim is prepared, and what it costs

The Scientific Research and Experimental Development (SR&ED) program is a federal tax incentive administered by the Canada Revenue Agency (CRA). It is a refundable or non-refundable investment tax credit, depending on the corporation, and it carries conditions and documentation requirements.

What the SR&ED program provides

For tax years beginning after December 15, 2024, the enhanced 35% SR&ED credit is available to Canadian-controlled private corporations (CCPCs) and eligible Canadian public corporations on up to $6 million of qualifying expenditures. It phases out for corporations with taxable capital between $15 million and $75 million. Provincial credits, such as the Ontario Innovation Tax Credit (OITC), may apply as well.

For illustration only: a CCPC with $200,000 of qualifying SR&ED expenditures in a tax year, under the expenditure limit and not phased out, would earn a federal credit of 35% of that amount. Actual results depend on the CRA's review.

What a claim needs to show

The CRA looks for three things in the work described on Form T661: 1. Technological uncertainty: a problem that could not be resolved with standard practice or readily available knowledge. 2. Technological advancement: the work aimed to advance the company's technological knowledge, whether or not it succeeded. 3. Systematic investigation: hypotheses were formed and tested through experiment or analysis.

How to compare ways of preparing a claim

Companies prepare SR&ED claims in-house, with their accountant, or with a specialist firm. Fee models differ: some firms charge a percentage of the credit, others a fixed fee. Compare on the written scope, the named person responsible, and the published fee. Form T661 discloses the claim preparer and the billing arrangement, as the CRA requires.

[!IMPORTANT] Documentation is the most common point of failure. Records created while the work is under way (tickets, commit history, lab notes) are the strongest support in a CRA review.

When is the SR&ED filing deadline?

An SR&ED claim is due 12 months after the filing-due date of the T2 return for the tax year in which the expenditures were incurred. For most corporations that is 18 months after the end of that tax year. Missing it means the expenditures for that year cannot be claimed.

Sources: [CRA SR&ED program](https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program.html).