Reviewed by Logan Hanson, BSc, CPA. Last verified against CRA guidance on July 29, 2026.
SR&ED, short for Scientific Research and Experimental Development, is Canada’s largest R&D funding program. It returns more than $4 billion a year to roughly 20,000 companies that solve technical problems standard practice cannot answer.
In practice, it works as a tax credit. For many small and growing companies that credit is refundable, meaning the government pays you cash even if you owe no tax. For a first-time claimant, that can be one of the largest non-dilutive funding sources available.
Your work qualifies if it meets all three of the CRA’s core tests. Use them as a quick self-check.
You faced a problem that could not be solved with standard practice or publicly available knowledge. If the answer was not obvious even to a skilled person in your field, you likely have uncertainty.
You worked through it methodically: forming hypotheses, testing, measuring, and iterating. Random trial and error does not count, but a disciplined engineering process does.
The work aimed to create new knowledge or capability. It does not need to be a breakthrough. Incremental advances count, as long as they push past what was already known.
For Canadian-controlled private corporations (CCPCs), the enhanced credit refunds 35% on the first $6 million of qualifying SR&ED expenditures, worth up to $2.1 million a year. Combined federal and provincial credits push the effective return higher, though not by simple addition, and how much higher depends on your province.
As a simple illustration, a CCPC with $300,000 of eligible salaries would see roughly $105,000 back as a cash refund at the 35% federal rate, before the prescribed-proxy overhead amount and provincial credits push it higher. That refund arrives even if the company made no profit that year.
A first claim follows a predictable path. Here is the shape of it.
List every project where you hit a real technical problem, including the ones that failed or were abandoned. Do not stop at your flagship feature.
Pull together the evidence created while the work happened: commits, tickets, test results, design notes, and time records. This is what proves eligibility.
Add up eligible salaries, 80% of arm’s-length Canadian contractor costs, materials consumed or transformed in the work, and overhead. Getting this complete is where refunds are won or lost.
The technical and financial claim goes on Form T661, filed with your corporate tax return. Errors here cause delays, so accuracy matters.
Some claims are reviewed. Refundable claims selected for review can take up to 180 days to process from a complete claim, and quick, clear responses keep things moving.
You have three honest options, and the best one depends on your situation.
Do it yourself: workable for a small, clear-cut claim if you have the time and patience for the documentation. The risk is under-claiming or a weak technical narrative.
Learn the process: our SR&ED Academy teaches your team to prepare audit-ready claims in-house, which suits companies that plan to claim every year.
Hire a consultant: most valuable once your refund is large enough that a bigger, better-defended claim clearly outweighs the fee. Our guide on in-house versus consultant walks through the trade-off, and the how to choose a consultant guide covers what to look for.
The big change is the expenditure limit. Budget 2025, enacted through Bill C-15 (Royal Assent March 26, 2026), raised the enhanced-rate limit from $3 million to $6 million for taxation years beginning on or after December 16, 2024. That effectively doubled the maximum refundable credit for CCPCs from about $1.05 million to $2.1 million a year.
For a first-time claimant, the practical takeaway is simple: nearly all of your qualifying spend earns the top refundable rate, because the $6 million ceiling is well beyond what most early-stage companies will reach. Our State of SR&ED report has the full detail.
Have these in hand before you file or before your first consultant call.
A first claim is where the most money is left on the table, because you do not yet know what qualifies or how to prove it. SRED.ca is built to close that gap.
We charge a transparent flat fee, billed monthly and published openly, and we support you year-round rather than appearing once at tax time. We back the work with Canada’s only SR&ED guarantee: any claim we prepare start to finish is guaranteed to be approved for at least 75% of its filed value, or our fees are waived, audit defense included. If there is no eligible work in your year, you don’t pay.
A first SR&ED claim feels daunting mostly because the program is unfamiliar, not because it is out of reach. If you faced real technical problems, worked through them methodically, and kept evidence along the way, you are most of the way there.
Confirm your deadline, list every eligible project, and decide how much of the paperwork you want to own. If you would like a second opinion before you file, book a free consultation and we will tell you honestly whether it is worth claiming this year.
Yes. For CCPCs, the enhanced credit is refundable, which means it is paid as cash even when you owe no tax. This is one of the main reasons pre-revenue startups pursue SR&ED.
It qualifies if it meets three tests: technological uncertainty, systematic investigation, and technological advancement. If you faced a problem with no obvious solution and worked through it methodically, you likely have an eligible project.
For a corporation, 18 months after the end of the fiscal year in which the work took place. For a year ending December 31, 2024, that means June 30, 2026. Late claims are very rarely accepted.
No, but it often helps. A small, simple claim can be filed yourself. A consultant is most valuable once your refund is large enough that a bigger, better-defended claim clearly outweighs the fee, or when you want audit defense included.
For CCPCs, the enhanced credit refunds 35% on the first $6 million of qualifying expenditures, worth up to $2.1 million a year before phase-outs. Combined federal and provincial credits are higher than the federal credit alone, though not by simple addition, and how much higher depends on your province.
This article is general information, not tax advice. Tax figures depend on your corporation type, province, and taxation year.
Do you have a SRED question? Planning for the future or perhaps you want to know how much your claim might be? Don’t worry, our CPA is always ready to answer any question. Get a SRED expert in your corner.
Have a question? We’d love to help. If you don’t have a SR&ED expert in your corner, doesn’t it make sense to have one?
