About SR&ED
What is an SR&ED tax credit?
- Purpose - Encourage technological development in Canada
- Provides $2 billion per year to Canadian companies
SR&ED stands for Scientific Research and Experimental Development. The Canada Revenue Agency offers tax credit incentives and refunds for companies that perform any kind of Research and Development. In simple terms, these are companies that in the course of developing new or improving existing products, processes, or services, become involved in resolving issues encountered in the development. Essentially, if you have developed or created a new process, product, or improved an existing process or product, you are eligible.
Benefits of SR&ED
- Receive money back for eligible R&D expenditures incurred
- Amount returned depends on previous year's taxable revenue:
- 20% tax credit on eligible SR&ED expenses OR
- 41.5% cash on eligible SR&ED expenses
An Example of What You Could Receive for a CCPC *(Some conditions apply) |
|
|---|---|
|
Total |
Eligible SR&ED Expenditures |
$1,000,000 |
% Return - Provincial ** |
10% |
% Return - Federal (35% of remainder) |
31.5% |
Total % |
41.5% |
Total $ |
$415,000 |
* CCPC – Canadian Controlled Private Corporation ** The Provincial rate of return varies from province to province. |
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