What work is eligible
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Requirements for SR&ED
For your work to be eligible for SR&ED tax incentives, it must be conducted in Canada and meet both of the following requirements:
- The work must be conducted for the advancement of scientific knowledge or for the purpose of achieving a technological advancement
- The work must be a systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis
What is an advancement
An advancement is the generation or discovery of new knowledge that moves the understanding of science or technology forward.
New knowledge is needed when it is unknown or uncertain that a given result can be achieved due to an insufficiency in the scientific or technological knowledge base that existed at the start of the project. This is referred to as the scientific or technological uncertainty.
Overcoming the uncertainty and gaining new scientific or technological knowledge is the reason why the SR&ED work is done.
You do not have to achieve your goal in order to gain new knowledge. For example, if your work allowed you to understand that the idea you tested is not a solution for your situation, this can be considered new knowledge.
What is important is that the knowledge gained advances the understanding of science or technology, not how the work advanced your business or business practices.
For detailed information, review The "Why" requirement, Guidelines on the eligibility of work for SR&ED tax incentives.
What is a systematic investigation or search
A systematic investigation or search refers to how SR&ED work is carried out. It is more than just having a systematic approach to your work, or using established techniques or protocols.
A systematic investigation or search must include the following steps:
- Defining a problem
- Advancing a hypothesis towards resolving that problem
- Planning and testing the hypothesis by experiment or analysis
- Developing logical conclusions based on the results
For detailed information, review The “How” requirement, Guidelines on the eligibility of work for SR&ED tax incentives.
If you receive other government funding for research and development (R&D), your work may still be eligible for SR&ED tax incentives.
Eligible types of work
Make sure that the work you claim is eligible work and does not include work or activities you cannot claim.
Eligible types of work include the following:
Basic research is work that aims to advance scientific knowledge without a practical application in view. It often takes place in laboratories and may be published in scientific journals.
Example of basic research
An example of basic research is the study of a newly discovered virus to better understand its characteristics.
Applied research is work that aims to advance scientific knowledge with a practical application in view.
Example of applied research
An example of applied research would be efforts to develop a vaccine against a new virus by exploiting some characteristics of that newly discovered virus.
Experimental development is work that aims to generate or discover technological knowledge or know-how in order to develop or improve materials, devices, products, or processes, including incremental improvements.
Example of experimental development
For example, experimental development could occur during the scale up and optimization of processes to enable large-scale and rapid production of a vaccine.
To review the legal definition of SR&ED, refer to how SR&ED is defined in the Income Tax Act.
Some support work may be eligible if it matches the needs and directly supports the basic research, applied research, or experimental development work.
What is support work
Eligible support work must directly support and be commensurate with the needs of the basic research, applied research, or experimental development work. This means it must correspond in the amount, size, extent, or duration that is needed to carry out the SR&ED work.
Eligible support work must be in one of the following categories:
- Operations research
- Mathematical analysis
- Computer programming
- Data collection
- Psychological research
Example of support work
For example, if you are scaling up production of a vaccine, you may perform tests on your new production process. This testing could be considered support work for your experimental development.
Work that is not eligible
The following work is excluded from the definition of SR&ED. As such, it is not eligible and cannot be claimed.
- Market research or sales promotion
- Quality control or routine testing of materials, devices, products, or processes
- Research in the social sciences or the humanities
- Prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas
- The 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
Example of excluded work
For example, you may carry out data collection as a routine activity for supporting normal business operations. This routinely collected data may also be useful to your SR&ED work. However, since the purpose of the data collection is to support normal business operations, it is excluded from the work you can claim for SR&ED tax incentives.
On the other hand, if data collection is carried out to directly support the SR&ED work, then it would be eligible as support work. This is because it is carried out specifically for the purpose of performing SR&ED.
Other activities you cannot claim
Activities related to acquiring knowledge or know-how that already exists do not meet the requirement of attempting to achieve scientific or technological advancement. As such, the following activities are not eligible:
- On-the-job learning
- Hiring expert (employees or consultants) to apply what they already know
- Purchasing proprietary knowledge
Get support with SR&ED eligibility
Review the eligibility guidelines
Assess the eligibility of your work
Use the online self-assessment tool to help determine if your work is eligible for SR&ED tax incentives and what information you need to complete your claim.
Request a Pre-claim consultation
Request a Pre-claim consultation to help you identify if there is SR&ED work in your project before you submit a claim.
Call us if you have any questions about the SR&ED program or the eligibility of your work.
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