SR&ED Tax Incentive (Canada) 🎁 Program
Refundable 35% R&D tax credit for Canadian-controlled private corporations on up to C$6 million of R&D a year.
| Who qualifies | Businesses doing SR&ED in Canada; 35% refundable rate for CCPCs on up to C$6 million, phased out between C$15 million and C$75 million of taxable capital. |
|---|---|
| Open in | Canada |
| Partner code needed | No: apply directly |
| Deadline | within 18 months of your tax year end |
| Terms last checked | 2026-10-11 |
About SR&ED Tax Incentive (Canada)
What you get
The Scientific Research and Experimental Development (SR&ED) programme gives a tax deduction and an investment tax credit (ITC) for R&D done in Canada. Most Canadian-controlled private corporations (CCPCs) earn an ITC at the enhanced rate of 35% on qualified expenditures up to an expenditure limit of C$6 million for tax years beginning after 15 December 2024. The credit on current expenditures is 100% refundable, so a loss-making startup can receive cash: up to about C$2.1 million (about $1.5 million) a year on C$6 million of spending. Spending above the limit earns 15%.
Who qualifies
Corporations, individuals, trusts and partnerships doing SR&ED work in Canada can claim; the enhanced, refundable rate is for CCPCs (and, from the same date, eligible Canadian public corporations). The limit starts to shrink when prior-year taxable capital employed in Canada reaches C$15 million and is nil at C$75 million; associated companies share one limit.
Good to know
A corporation must file Form T661 and Schedule T2SCH31 within 18 months of its tax year end, or no credit is allowed. Other government help, such as NRC IRAP funding, reduces the credit you can earn, and provincial credits reduce eligible expenditure. You can ask CRA for optional pre-claim approval on up to three projects before you start.
Verdict
One of the most generous R&D credits anywhere for a Canadian startup. Track technical uncertainty and staff time from day one, and file on time. Many startups use a specialist preparer, but you can file yourself with the T661 guide if your records are clear.
How to apply
- Check that your work meets CRA's definition of SR&ED.
- Optionally request pre-claim approval for up to three projects before starting the work.
- Record project activities, technical uncertainties and staff time through the year.
- File Form T661 and Schedule T2SCH31 with your T2 return, at the latest 18 months after your tax year end.
Who it is for
Steps SR&ED Tax Incentive (Canada) helps with
Pros
- Fully refundable 35% credit on current R&D costs
- No competition: every qualifying claim is paid
- Higher C$6 million limit since 2024
Cons
- Missed deadlines mean no credit at all
- Needs careful records to survive a CRA review
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