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About the SR&ED Program
SR&ED is a federal program to fund scientifc research and experimental development. Eligible businesses get a refund of up to 64% of eligible expenses. Every year, over $3B are disbursed to more than 20,000 applicants.
The business must be engaged in basic research, applied research or experimental development.
The business must have staff on payroll and needs to exist for a minimum one fiscal year.
The business went through an iterative process to try to overcome challenges or uncertainties.
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Frequently Asked Questions
The SR&ED program is available to any business operating and carrying out R&D in Canada that is involved in basic or applied research, or in advancing technology to improve or develop new materials, devices, products, or processes may be eligible under the SR&ED program.
The work must fall into one of the following categories:
- Experimental development – This is the work done to achieve technological advancement for the purpose of creating new, or improving existing, materials, devices, products, or processes.
- Applied research – This is work done to advance scientific knowledge with a specific practical application in view.
- Basic research – This is work done to advance scientific knowledge without a specific practical application in view.
SR&ED can also include other work that is directly in support of the experimental development, applied research or basic research. This support work includes only the following eight specific types:
- operations research
- mathematical analysis
- computer programming
- data collection
- psychological research
The support work to be claimed must correspond to the needs of the experimental development, applied research or basic research performed.
Certain work is not eligible for benefits under the SR&ED program, including:
- market research or sales promotion
- quality control or routine testing of materials, devices, products, or processes.
- research in social sciences or the humanities.
- prospecting, exploring or drilling for, or producing minerals, petroleum or natural gas.
- commercial production of a new or improved material, device or product, or the commercial use of a new or improved process.
- style changes,
- routine data collection.
You may claim many of the expenditures incurred for SR&ED during your fiscal year. These expenditures may include:
- Salaries and wages
- SR&ED contracts
- Lease costs of equipment
- Third-party payments
- Capital expenditures
- Form T661, Scientific Research and Experimental Development (SR&D) Expenditures Claim
- Form T2SCH31, Investment Tax Credit – Corporations, or
- Form T2038 (IND), Investment Tax Credits (Individuals)
When you send in your claim, the CRA will determine if it can be processed as filed without further review. If they can process your claim as filed, they will reduce your taxes payable or, if applicable, issue a cheque to you. If the CRA cannot process your claim as filed, they may contact you to request more information or to discuss the review of your claim.
If you qualify for a refund, your claim can usually be processed within 120 days after the CRA receives it.
Generally, the best evidence is that which was generated as the SR&ED was being carried out. Examples of technical and financial supporting evidence that could be kept are:
- Project planning documents
- Documents on design of experiments
- Experimentation plan
- Design documents and technical drawings
- Project records, laboratory notebooks
- Design, system architecture and source code (software development)
- Records of trial runs
- Project progress reports
- Minutes of project meetings
- Test protocols, data, results, analysis and conclusions
- Final project report or professional publications
- Photographs, videos
- Prototypes, samples
- Scrap, scrap records
- Contracts, lease agreements
- Records of resources allocated to the project, time sheets, activity records, payroll records
- Purchase invoices and proof of payment
- Accounting records
A project does not have to succeed to qualify for the SR&ED tax credit. To help you determine if your R&D work meets SR&ED requirements, please try our Online Eligibility Self-Assessment Tool.
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