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SR&ED tax credit eligibility

Are you creating new products, developing new processes, or using new materials? If so, your business may be eligible to claim the SR&ED tax credit. In fact, many companies perform qualifying work without realizing it. EY can determine if your business is eligible. And even if you know you qualify, we can help you improve the yield and return on your claims.

If your organization is a proprietorship, a partnership, or a corporation carrying on business in Canada, you may qualify for a cash payment and/or credit against taxes payable.

Eligible expenditures
  • Labour
  • Overhead—traditional or proxy method
  • Materials
  • Subcontracting fees
  • Capital equipment
  • Third-party payments.
Project criteria

Scientific or Technological Advancement: Project must generate information that advances our understanding of scientific relations or technologies, or be intended at the outset to advance a technology beyond the existing state of the art. Overcoming a technological uncertainty, by definition, will result in a technological advance.

Scientific or Technological Uncertainty: Project must contain technological uncertainty:

  • The taxpayer is uncertain whether the goals of the project can be achieved at all; or
  • The taxpayer is fairly confident that the results can be achieved but is uncertain which of several technical alternatives (e.g., routes, approaches, equipment configurations, architectures) will meet the desired specifications within business constraints.

Scientific and Technical Content: The project must demonstrate that it incorporated the scientific method—a systematic investigation. Work must be supported by some form of evidence and performed by qualified people.

SR&ED project categories
  • Basic Research—Work undertaken to advance scientific knowledge without a specific practical application in view.
  • Applied Research—Work undertaken to advance scientific knowledge with a specific application in view.
  • Experimental Development—Work undertaken to achieve technological advances for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements.
  • Support Work—Work that directly supports and is commensurate with the needs of basic research, applied research, and experimental development in the following areas: engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, and psychological research.

Contact us

Susan Bishop    Susan Bishop 
Leader,
Business Tax Incentives, SR&ED
905 882 3194

Contact a member of our team.
 

Learn more

EY's Guide to Scientific Research & Experimental Development, 2009 (2nd) Edition    EY's Guide to SR&ED

Purchase a copy.