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

  1. Basic research
  2. Applied research
  3. 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.

Annual impact:

$3 billion in tax incentives

20,000 applicants


Eligible applicants:

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.

Next Steps

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: