SR&ED Questions, Answered

The Scientific Research and Experimental Development (SR&ED) program — often written without the ampersand as SRED — is Canada's largest federal tax incentive, providing businesses with tax credits and deductions for eligible R&D activities. It is administered by the Canada Revenue Agency (CRA) and available to Canadian-controlled private corporations (CCPCs), public companies, and individuals. Learn more: What is SR&ED?.

Canadian-controlled private corporations (CCPCs) can receive an Investment Tax Credit (ITC) of up to 35% on the first $6 million of qualifying SR&ED expenditures — doubled from $3 million under Bill C-15 (March 2026), which also raised the maximum annual refundable credit from $1.05 million to $2.1 million — and 15% on amounts above that. Public companies and other entities generally receive a 15% non-refundable ITC, except that eligible Canadian public corporations (ECPCs) can now also access the enhanced 35% refundable rate on up to their expenditure limit for the first time, subject to gross revenue rules. Many provinces also offer additional credits on top of the federal amount. Learn more: SR&ED calculator.

Eligible work must meet three criteria: (1) there must be a scientific or technological uncertainty that cannot be resolved through routine engineering or practice; (2) a systematic investigation must be undertaken — a plan, experiment, or analysis — to resolve that uncertainty; and (3) the work must be conducted to advance scientific knowledge or achieve a technological advancement. Software development, product R&D, manufacturing process improvements, and engineering challenges commonly qualify. Learn more: SR&ED eligibility assessment.

Possibly, yes. Software development that involves overcoming technological uncertainty — such as developing novel algorithms, solving architectural challenges without established solutions, or advancing the state of the art — can qualify. Routine application development or customization generally does not. We can assess your specific activities during a free consultation.

Eligible SR&ED expenditures include: salaries and wages of employees directly engaged in SR&ED, 80% of contractor payments for SR&ED work, materials consumed or transformed in SR&ED, and a portion of overhead expenses. Under Bill C-15, capital property acquired on or after December 16, 2024 is once again eligible — including equipment, machinery, and testing apparatus — reversing the exclusion of capital expenditures that had been in place since 2014. Learn more: SR&ED eligible expenses.

You can file an SR&ED claim up to 18 months after the end of your fiscal year. For example, if your fiscal year ended December 31, 2024, you have until June 30, 2026 to file an SR&ED claim for that year. Learn more: T661 form guide.

CRA audits a portion of SR&ED claims each year. If your claim is selected, a CRA reviewer will request supporting documentation and may conduct interviews with your technical staff. With proper documentation prepared upfront, an audit is manageable. If your claim is selected for review, SoftInventors will support you through the entire process. Learn more: SR&ED audit and CRA review support.

We offer flexible engagement models depending on your needs and preference. This includes fixed-fee arrangements for straightforward claims, hourly consulting for specific aspects of your claim, and contingency-based fees where our compensation is a percentage of the refund you receive. We discuss all options transparently during our initial consultation.

Yes. SR&ED eligibility is not dependent on profitability or revenue. Startups and early-stage companies conducting eligible R&D are fully entitled to claim. Critically, Canadian-controlled private corporations (CCPCs) receive a refundable Investment Tax Credit — meaning you can receive a cash refund even if you owe no corporate income tax. This makes SR&ED especially valuable for startups that are not yet profitable. Learn more: R&ED tax credit criteria for startups.

CRA expects contemporaneous documentation — records created at the time the work is performed, not reconstructed after the fact. This includes project plans, meeting notes, test logs and results, source code version history, time-tracking records, and any records of hypotheses tested and conclusions reached. SoftInventors helps clients establish practical documentation habits throughout the year to minimize the burden at claim time. Learn more: SR&ED eligibility assessment.

A technological uncertainty exists when you cannot determine, using currently available scientific or engineering knowledge, whether a particular outcome is achievable or how to achieve it. It is not simply commercial uncertainty (e.g., "will customers buy this?") or project risk. The uncertainty must be technical in nature — for example, whether a specific algorithm can meet a performance target, or whether a material will behave as needed under certain conditions. Learn more: What is SR&ED?.

Government assistance — including grants, forgivable loans, and certain subsidies — generally reduces your eligible SR&ED expenditure base dollar-for-dollar. This is called the "government assistance reduction." However, the specific impact depends on the type of funding, when it was received, and how it was applied. SoftInventors analyzes your full funding picture to model the net benefit and help you sequence and structure claims optimally. Learn more: SR&ED eligible expenses.

Yes, with conditions. Payments to arm's-length Canadian contractors who perform SR&ED work on your behalf are eligible at 80% of the cost under the traditional method. Non-arm's-length payments (e.g., to a related company) have different rules and require careful analysis. Foreign contractor payments are generally not eligible. We assess your contractor relationships and contracts to maximize what you can claim. Learn more: SR&ED eligible expenses.

Bill C-15 received Royal Assent on March 26, 2026 and introduced the most significant SR&ED program changes in over a decade. The enhanced expenditure limit for CCPCs doubled from $3 million to $6 million, raising the maximum refundable credit from $1.05 million to $2.1 million per year. Capital property acquired on or after December 16, 2024 is once again eligible — a major reversal after capital expenditures were excluded since 2014. The taxable-capital phase-out range for the enhanced 35% rate expanded from $10M–$50M to $15M–$75M, so more mid-sized companies retain full or partial access to the enhanced rate. Eligible Canadian public corporations (ECPCs) can now access the enhanced 35% refundable credit for the first time, subject to gross revenue rules. A new CRA Pre-Claim Approval Process also lets businesses seek advance confirmation of eligibility before filing, significantly reducing audit risk. Contact SoftInventors to assess how these changes affect your current and future claims. Learn more: What is SR&ED?.

Yes — for the first time, eligible Canadian public corporations (ECPCs) listed on designated Canadian stock exchanges and controlled by Canadian residents can now access the enhanced 35% refundable SR&ED credit, subject to gross revenue rules. This is a significant change that opens SR&ED refundable credits to a new category of Canadian businesses. Contact us to determine if your public corporation qualifies. Learn more: What is SR&ED?.

Yes. Under Bill C-15, capital property acquired on or after December 16, 2024 is once again eligible for SR&ED claims. This includes specialized equipment, machinery, testing apparatus, and hardware — as well as compute infrastructure such as GPUs for AI and machine learning projects. Capital expenditures had been excluded from SR&ED since 2014, so this is a major opportunity for capital-intensive R&D businesses in manufacturing, hardware development, life sciences, and clean technology. Learn more: SR&ED eligible expenses.

Under Bill C-15, the annual enhanced expenditure limit for CCPCs doubled from $3 million to $6 million. This means if your eligible SR&ED expenditures exceed $3 million, you can now claim the enhanced 35% refundable rate on up to $6 million — potentially doubling your maximum refundable credit from $1.05 million to $2.1 million per year. If you were previously capped at the old $3 million limit, this change alone could significantly increase your annual SR&ED refund. Learn more: SR&ED calculator.

Under the old rules, the enhanced 35% refundable credit began phasing out once your taxable capital exceeded $10 million and was fully eliminated at $50 million. Under Bill C-15, these thresholds have been raised significantly — the phase-out now begins at $15 million and is fully eliminated at $75 million. This means many mid-sized and growing Canadian companies that were previously partially or fully phased out now have greater or full access to the enhanced 35% refundable rate. Learn more: What is SR&ED?.