How to Apply for SR&ED Tax Credits
Complete step-by-step guide to applying for Scientific Research & Experimental Development tax credits. Learn the application process, requirements, and strategies to secure up to 65% refundable tax credits on R&D activities.
SR&ED Tax Credit Application Process
Enhanced 2025 Changes
New enhanced rates with $4.5M expenditure limit (up from $3M), expanded eligibility for Canadian public corporations, and restored capital expenditure ITCs effective December 16, 2024.
Track R&D Activities
Document all eligible research and experimental development throughout the year
Prepare Documentation
Compile technical and financial records supporting your SR&ED claim
File Form T661
Submit SR&ED claim with corporate tax return within 18 months
Receive Credits
CRA processes claim and issues refundable tax credits
SR&ED Eligibility Requirements
Eligible SR&ED Activities:
- • Experimental development of new products/processes
- • Applied research for specific applications
- • Basic research advancing scientific knowledge
- • Support work (engineering, design, testing)
- • Systematic investigation for technological advancement
- • Work to overcome technical challenges
Eligible Expenses (2025):
- • Salaries & wages of R&D personnel
- • Materials consumed in R&D
- • Third-party R&D contracts (80%)
- • Overhead (65% traditional, 55% proxy)
- • Capital equipment (restored 2025)
- • Lease payments for R&D equipment
2025 SR&ED Tax Credit Rates
Combined Federal + Provincial Rates:
Quebec (CCPC): 35% + 30% = 65% Total
Ontario (CCPC): 35% + 10% = 45% Total
BC (CCPC): 35% + 10% = 45% Total
Alberta (CCPC): 35% + 10% = 45% Total
Saskatchewan: 35% + 10% = 45% Total
Atlantic Canada: 35% + 15% = 50% Total
CCPC Requirements:
- • Canadian-controlled private corporation
- • Taxable capital under $15M (phase-out starts)
- • Active business income qualification
- • 35% refundable on first $4.5M
ECPC Changes (2025):
- • Eligible Canadian public corporations
- • Now qualify for 35% enhanced rate
- • Gross revenue phase-out $15M-$75M
- • Major expansion of eligibility
Form T661 Filing Requirements
Corporation details and contact info
Industry codes and business activities
SR&ED projects and expenditures
Total eligible expenses by category
- Technical Content
Detailed R&D project descriptions
- Financial Records
Expense tracking and supporting invoices
- Time Tracking
Employee time allocation to SR&ED
- Progress Records
Lab notes, test results, iterations
Required Documentation & Records
Detailed technical objectives and hypotheses
Systematic investigation methods and results
Technological uncertainties and solutions
Knowledge gained and technological progress
Employee time tracking and payroll records
Invoices for materials consumed in R&D
Third-party R&D service agreements
Traditional or proxy method calculations
SR&ED Application Success Strategies
✅ Best Practices
- Maintain contemporaneous records throughout the year
- Focus on technical uncertainty and systematic investigation
- Document failed experiments and iterations
- Stack federal and provincial credits for maximum benefit
❌ Common Mistakes
- Including routine engineering or quality control
- Inadequate documentation of technical challenges
- Missing the 18-month filing deadline
- Poor expense allocation and tracking
Official SR&ED Resources
SR&ED Calculator
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Free Assessment
Professional SR&ED eligibility review
Expert Support
Professional SR&ED application help
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