What are SR&ED tax incentives
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How your business can benefit
If your business is engaged in scientific research and experimental development (SR&ED), you may be able to earn tax incentives that reduce your income tax payable.
Corporations, individuals, trusts, and partnerships that conduct SR&ED work in Canada may be able to:
- Claim a deduction against income
- Earn an investment tax credit (ITC) that they can apply against their income tax payable
- Partnerships allocate the ITC earned to their eligible partners
Claim a deduction against income
To claim a deduction against income, you will need to calculate the allowable SR&ED expenditures that you incurred in the year.
You can then calculate your pool of deductible expenditures and use any balance to reduce your net income for the current year or a future year.
Earn an investment tax credit (ITC)
You may earn an ITC to reduce your income tax payable for the year.
Your business may earn the credit at a basic rate of 15%. Some corporations may claim an ITC at the enhanced rate of 35%.
Some businesses may also earn a refundable ITC.
Other government funding for R&D
Other government R&D funding and assistance will not prevent your work from being eligible for SR&ED tax incentives, but they will reduce the amount of ITC you can earn.
For example, if you receive NRC IRAP, it will reduce the amount of ITC you can earn.
Provincial and territorial R&D tax credits may also be available, although they will reduce the expenditures you can claim for SR&ED.
You will need to report any funding or assistance you receive in your SR&ED claim.
To learn more about other government funding and assistance, review:
Get support understanding SR&ED
Attend a webinar to learn more about SR&ED tax incentives.
Request a visit from our outreach team to arrange presentations for your business, to speak at an event, or to provide products tailored to your business.
Call us if you have any questions about the SR&ED tax incentive program.
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