Scientific Research & Experimental Development (SR&ED) Tax Credits
Canada's largest R&D tax incentive program providing up to 65% refundable tax credits for eligible research and experimental development activities. Enhanced 2026 rates with $4.5M expenditure limit and expanded eligibility.
🚀 Enhanced SR&ED 2026 Changes (Effective December 16, 2024)
Canada's Premier R&D Tax Incentive Program
The SR&ED program provides tax incentives to Canadian businesses that conduct research and development in Canada, supporting innovation across all industries with up to 65% combined federal and provincial tax credits.
2026 SR&ED Tax Credit Rates & Eligibility
Enhanced Rate (First $4.5M)
Basic Rate (Over $4.5M)
Qualifying corporations can receive 40% refund on the 15% credit earned over the $4.5M limit.
📋 CCPC Eligibility Requirements:
- • Canadian-resident corporation
- • Private corporation (not public)
- • Controlled by Canadian residents
- • Taxable capital under phase-out thresholds
- • Qualifying income limits met
- • Active business operations in Canada
Enhanced Rate (First $4.5M)
Major enhancement for 2026 - public corporations now eligible for enhanced refundable rate (previously only CCPCs).
Phase-out Rules
Gross Revenue Phase-out: Enhanced rate reduced when average gross revenue over 3 years is between $15M-$75M
Complete Phase-out: Enhanced rate eliminated at $75M average gross revenue
📋 ECPC Eligibility Requirements (2026):
- • Canadian-resident public corporation
- • All or substantially all shares owned by eligible entities
- • Meets gross revenue thresholds
- • Active business operations throughout tax year
- • Canadian operations and control
- • Qualifying R&D expenditures in Canada
Other Corporations
Credits reduce tax payable but no cash refund available.
Individuals & Trusts
40% of unused credits refundable after applying to tax payable.
Partnerships
Partnerships cannot directly claim ITCs.
Credits calculated at partnership level and allocated to eligible partners based on their entity type.
What Qualifies for SR&ED Tax Credits?
✅ Experimental Development
- • Systematic investigation to achieve technological advancement
- • Creating new materials, products, devices, or processes
- • Improving existing technology beyond current capabilities
✅ Applied Research
- • Investigation to advance scientific knowledge with specific application
- • Research directed toward practical problems
- • Studies to understand phenomena for technological advancement
✅ Basic Research
- • Investigation to advance scientific knowledge without specific application
- • Original investigation to understand underlying phenomena
- • Research contributing to general knowledge base
✅ Support Work
- • Engineering, design, operations research
- • Mathematical analysis, computer programming
- • Data collection, testing, psychological research
💰 Current Expenditures
- • Salaries & Wages: Employees directly engaged in SR&ED
- • Materials: Consumed/transformed in SR&ED activities
- • Third-Party Payments: 80% of arm's length contracts
- • Overhead: Specified percentage of salaries (65% traditional, 55% proxy)
🔧 Capital Expenditures (Restored 2026)
- • Equipment and machinery used primarily for SR&ED
- • Property acquired on/after December 16, 2024
- • 40% refundable rate for qualifying CCPCs
- • Must be new to the taxpayer (not previously used)
🏢 Lease Expenses (Restored 2026)
- • Lease payments for SR&ED equipment
- • First payable on/after December 16, 2024
- • Equipment used primarily for SR&ED activities
❌ Non-Eligible Expenses
- • General business expenses
- • Market research and sales promotion
- • Quality control and routine testing
- • Commercial production activities
SR&ED Tax Credit Calculator
Estimate your potential SR&ED tax credits based on 2026 enhanced rates and expenditure limits.
Estimated Tax Credits
SR&ED Application Process & Timeline
Maintain detailed R&D records throughout the year
Prepare technical and financial documentation
Submit Form T661 with corporate tax return
CRA review and potential audit (60-180 days)
📅 Important SR&ED Deadlines & Timeline
- • Filing Deadline: 18 months after tax year-end
- • Processing Time: 60 days (no review), 180 days (with review)
- • Documentation: Maintain for 6 years
- • Carry Forward: Up to 20 years for unused credits
- • Carry Back: Up to 3 years for current year credits
- • Refund Timing: 120 days from acceptance
SR&ED Success Strategies
Provincial SR&ED Tax Credits
CRIC (Crédit d'impôt pour la recherche et développement)
Ontario Innovation Tax Credit (OITC)
BC Scientific Research and Experimental Development Tax Credit
Alberta Investor Tax Credit (AITC)
Saskatchewan R&D Tax Credit
Atlantic Investment Tax Credit
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Free SR&ED Guide
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