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

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 that will lead to new, improved, or technologically advanced products or processes.

Eligibility Criteria

Generally, a Canadian-controlled private corporation can earn an investment tax credit (ITC) of 35% up to the first $2 million of qualified expenditures for SR&ED carried out in Canada, and 20% on any excess amount.

Other Canadian corporations, proprietorships, partnerships, and trusts can earn an ITC of 20% of qualified expenditures for SR&ED carried out in Canada.

Eligible Activities

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

Summary

To qualify for the SR&ED program, a project must:

• advance our understanding of scientific relations or technologies; 
• address scientific or technological uncertainty; 
• incorporate a systematic investigation 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 businesses apply?

Businesses 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 policies in the Publications Section.

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

Ontario Contact(s):
See National Contact.

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National Contact(s):
Canada Revenue Agency
Toll-free (information): 1-800-959-5525 (Business Enquiries and Registrations)
Toll-free (publications): 1-800-959-2221 (Forms and Publications)
Web site: http://www.cra.gc.ca/menu-e.html