If you are filing your first SR&ED claim, here is the one thing to understand up front: the program is generous, but the paperwork is unforgiving. A good consultant earns their keep by finding eligible work you would have overlooked and by translating your engineering story into the evidence the CRA needs to approve it.
The gap isn’t between companies that innovate and those that don’t. It’s between companies that recognize their innovation and document it properly, and those that don’t. First-time claimants almost always sit in the second group, not because their work doesn’t qualify, but because nobody told them what to keep.
Below are eight facts worth knowing before you sign with anyone. They will help you ask better questions, avoid the common traps, and choose a partner instead of just a form-filler.
The Scientific Research and Experimental Development (SR&ED) program is the single largest source of federal R&D support in Canada: the CRA allowed $4.6 billion in investment tax credits on 23,677 claims in 2025-26. It rewards companies that solve technical problems standard practice can’t answer.
Crucially for startups, the refundable portion is paid as cash even if you owe no tax. You do not need to be profitable to benefit.
The industry standard is a contingency fee: the consultant takes a percentage of whatever refund you receive, typically between 10% and 25%. The appeal is obvious, since there is no upfront cost. The downside is that the percentage repeats every year, so a firm that keeps claiming can quietly become one of your largest recurring expenses.
A smaller group of firms charges a flat fee instead. The FAQ below compares the two models in plain terms.
Success or failure in meeting your business objective is not what determines eligibility. What matters is whether you faced genuine technological uncertainty and worked through it systematically. A dead end that taught you something still counts.
First-time claimants routinely disqualify themselves in their own heads, assuming that because a feature never shipped or an experiment flopped, there is nothing to claim. Often the opposite is true. The failed attempts are frequently the clearest evidence of the systematic investigation the CRA is looking for.
If you file as a corporation, your SR&ED claim is due 18 months after the end of the fiscal year in which the work happened. For example, if your fiscal year ends December 31, 2025, your filing deadline is June 30, 2027. This deadline is effectively absolute, and the CRA very rarely accepts late claims.
This is one of the most expensive facts for first-timers to learn the hard way. A refund you were fully entitled to can vanish simply because the window closed. A good consultant tracks these dates for you so a missed deadline never costs you a year of R&D funding.
If you paid an arm’s-length Canadian contractor to perform eligible R&D in Canada on your behalf, and the contractor is a taxable supplier, you can generally claim 80% of that eligible cost. Salaries, some materials (eligible when they are consumed or transformed in the work), and certain overhead can also qualify.
This matters for startups that lean on freelancers and agencies instead of a full in-house team. The eligible costs are often larger than founders expect, which is exactly the kind of value a consultant surfaces when they map your spend against the rules. The biggest misses are in costs, not projects: contractors at 80%, the support work that enabled the experiment, and partial-time contributions. A consultant who counts only full-time developer salaries is leaving money behind.
For Canadian-controlled private corporations (CCPCs), the enhanced credit refunds 35% on the first $6 million of qualifying SR&ED expenditures. That is worth up to $2.1 million in refundable credits in a single year, and it applies for taxation years that begin on or after December 16, 2024.
The $6 million ceiling is recent. Bill C-15 raised the expenditure limit from $3 million to $6 million for taxation years beginning on or after December 16, 2024, effectively doubling the maximum refundable credit for growing companies. Treat $2.1 million as a ceiling rather than a default: the enhanced rate phases out as your taxable capital grows, and the limit is shared among associated corporations. Most provinces and territories run their own R&D credit as well, and where one exists it makes your total return larger. How much larger depends on the province.
The CRA does not take your word for it. Every eligible project has to show three things: technological uncertainty, systematic investigation, and technological advancement. If your records don’t tell that story clearly, the refund shrinks or disappears, no matter how real the work was.
The records that hold up are the ones created while the work is happening: technical diaries, experiment logs, progress notes, and time tracking. Reconstructing them from memory a year later is where first-time claims fall apart. This is why the strongest consultants build documentation habits into your workflow from day one rather than scrambling at filing time. They also need your engineers, not just your accountant: the technical narrative has to come from the people who did the work.
Filing the claim is only half the job. If the CRA selects your claim for review, someone has to defend it, and refundable claims selected for review can take up to 180 days to process from a complete claim. A consultant who files and disappears leaves you to face that alone.
Before you sign, ask directly whether audit defense is included or billed separately, what happens if the CRA reduces your claim, whether they review your whole year, and whether they will work with your engineers. Be wary of anyone who guarantees a specific CRA outcome, because no one can.
Here is what the enhanced rate can look like in round numbers. Suppose your CCPC has a year like this:
That is $580,000 of qualifying expenditure. At the 35% enhanced refundable rate, that works out to roughly $203,000 back as a cash refund, before the prescribed-proxy overhead amount, which usually pushes the figure higher. Numbers like these are why the $6 million ceiling matters so little for most first-time claimants: nearly all of your qualifying spend earns the top rate. This is illustrative, so your numbers will vary.
Before you file your first claim, or before your first call with a consultant, get these in order. Having them ready is the difference between a smooth claim and a stressful one.
Your first SR&ED claim does not have to be intimidating. The program is designed to reward exactly the kind of technical risk-taking you are already doing. The facts above, from how fees work to why documentation matters more than the size of your idea, put you in a position to choose a consultant on your terms.
Ask about fees, deadlines, and audit defense before you sign. Keep your records as you go. And if you want a second opinion on whether your work qualifies, you can book a free consultation and we will tell you honestly, even if the answer is not yet. Our pricing and guarantee details are on the site if you want to compare us.
Related reading: SR&ED consultant costs in Canada, how to choose an SR&ED consultant, the questions to ask an SR&ED consultant, the State of SR&ED report on the program’s scale, and the SR&ED Academy for doing the documentation in-house.
No, you can file an SR&ED claim yourself. But first-time claimants often leave money on the table or trigger a CRA review because they miss eligible work or document it poorly. A consultant is most valuable when your refund is large enough that a bigger, better-defended claim outweighs the fee.
Percentage pros: nothing upfront, the fee shrinks with a small claim, and the firm wants the number as big as possible. Percentage cons: it compounds every year, and a large claim can cost far more than the work. Flat-fee pros: a known cost and an incentive to file an accurate, defensible claim. Flat-fee cons: the cost is fixed whatever the refund, so it suits a claim big enough to matter.
The CRA’s service standard is 60 calendar days for a refundable claim it accepts as filed, and 180 days for one it selects for review, both measured from a complete claim. Those are targets, not promises. A clean, well-documented first claim is the best way to stay on the faster path.
Yes. Eligibility depends on whether you faced technological uncertainty and investigated it systematically, not on whether the project succeeded. Failed experiments often provide the clearest evidence that your work qualifies. Keep the notes from the abandoned approach: what you learned from the dead end is part of the claim, not a footnote to it.
Yes. A good one reconstructs what it can from your commits, tickets and release history for the current claim, then sets up light tracking so next year’s claim is stronger and easier to defend. The first claim is usually the hardest for exactly this reason, and the second is much easier.
The CRA asks you to support both halves of the claim: the technical story and the financial figures. With audit defense in the engagement, your consultant handles those questions with you, using the evidence gathered when the work was done. A claim built to be defended makes this far easier.
This article is general information, not tax advice. Tax figures depend on your corporation type, province, and taxation year.
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