The Scientific Research and Experimental Development (SR&ED) Program, is a federal tax incentive program designed to encourage Canadian businesses in all sectors and industries to conduct research and development (R&D) and drive innovation in Canada. This program makes up one of the strongest incentives for research and development of the major industrialized countries.
The program is administered by the Canada Revenue Agency (CRA), which delivers SR&ED tax incentives, while encouraging businesses to prepare their claims in compliance with the CRA’s policies and procedures.
The benefits of the SR&ED tax incentive program comes in two parts. It lets you deduct SR&ED expenditures from your income for tax purposes. In addition, it provides you with a SR&ED investment tax credit (ITC), to be used to reduce your income tax payable calculated under Part I of the Income Tax Act.
Eligibility is based on a wide range of factors and definitions; however, for simplicity "scientific research and experimental development” means systematic investigation or search carried out in a field of science or technology through experimentation or analysis:
basic research; work undertaken for the advancement of scientific knowledge without a specific practical application in view;
applied research; work undertaken for the advancement of scientific knowledge with a specific practical application in view; or
experimental development; work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes.
Many businesses who do not know about SR&ED are missing out on the benefits. For any further questions, please contact us for more information.