Scientific Research and Experimental Development (SR&ED;) Program

The federal government provides income tax incentives to Canadian taxpayers that conduct scientific research and experimental development (SR&ED) in Canada. The program encourages industry, including small business and start-up firms, to develop technologically advanced products and processes in Canada.

Claimants can apply for SR&ED investment tax credits for expenditures such as wages, materials, machinery, equipment, some overhead, and SR&ED contracts.

Eligibility Criteria

Canadian-controlled private corporations with less than $200 000 of taxable income can receive a refundable investment tax credit of up to 35% (enriched rate) for qualifying SR&ED expenses. An enriched refundable claim has a limit of $2 million.

Other Canadian corporations, proprietorships, partnerships, and trusts can receive an investment tax credit of up to 20% for qualifying SR&ED expenditures.

Summary

To qualify for the SR&ED program, a project must advance our understanding of scientific relations or technologies; it must address scientific or technological uncertainty; and it must incorporate a systematic investigation by experiment of analysis performed by qualified personnel. For a listing of eligible and ineligible projects, see the section entitled What Work is Eligible in CRA's brochure An Introduction to the Scientific Research and Experimental Development Program.

How do taxpayers apply?

Taxpayers have to complete and submit these forms with the tax return for the year:

• Form T661, Claim for Scientific Research and Experimental Development (SR&ED) Expenditures Carried on in Canada; (Adobe Acrobat Reader required);
• Form T2SCH31, Investment Tax Credit - Corporations(Adobe Acrobat Reader required).

See also Application policiesin the Publications Section.

If you require personal assistance, visit the Tax Service Office closest to you (see Related Reading: Business Window - Supplement or CRA's Web site for a list of addresses).

*Note: To download publications in PDF format, Adobe Acrobat Reader is required (available free of charge).

Ontario Contact(s):
See National Contact.