Scientific Research and Experimental Development
Companies of any size that invest in research and development (R&D) in Canada can take advantage of the Scientific Research and Experimental Development (SR&ED) tax incentive program, Canada’s largest R&D program.
Types of SR&ED tax incentives
- Basic research
- Applied research
- Experimental development
These tax incentives come in two forms:
- Income tax deduction
- Investment tax credit, which may be applied against income taxes payable in the current year, in a prior year, or may carried forward to a future year. In some cases, the credit may be refundable.
$3 billion in tax incentives
- Canadian-controlled private corporations (CCPC)
- Other private corporations
- Individuals and trusts, and
- Members of partnerships
Eligible R&D projects:
- Address a technological or scientific uncertainty
- Address, or attempt to address, a technological advancement, and
- Use a systematic investigation or search
Foreign companies can apply for the Canadian SR&ED tax incentives indirectly by forming a Canadian subsidiary company to perform eligible R&D work in Canada for itself or on a contractual basis on behalf of the parent company. In this way the Canadian subsidiary applies for the SR&ED tax incentives where they may deduct eligible expenditures and claim a 15% non-refundable tax credit. A non-refundable tax credit may be used to reduce federal taxes payable in the current year, in the previous three years, or carried forward to future years.
If you are a foreign-owned multinational business interested in conducting R&D in Canada, contact us for a customized proposal outlining how SR&ED and other applicable incentives can help you grow.
To learn more about whether your company can take advantage of SR&ED tax incentives, visit these resources:
- Webinars—general overview of the program and requirements
- Self-Assessment and Learning Tool
- Pre-claim consultation service—a SR&ED program staff member will tell you if there is SR&ED work in any of your projects before you send a claim
- First Time Claimant Advisory Service—in-person education and assistance for first-time SR&ED claimants
- In-person seminars