SR&ED Tax Incentive
Canada Revenue Agency · R&D tax credit
VariesInvestment tax credit of 15% (basic) or 35% enhanced, refundable rate for CCPCs and eligible Canadian public corporations on up to C$6M of qualifying expenditure per year (limit phases out at C$15M–75M taxable capital); plus deduction of R&D spend. Amount depends on spend.
Canada's main R&D tax incentive: claim a deduction and an investment tax credit (refundable for eligible small CCPCs) on SR&ED work done in Canada.
Key terms
- Work must meet SR&ED definition (scientific/technological advancement, uncertainty, systematic investigation)
- Enhanced 35% refundable ITC on up to C$6M/yr of expenditure (tax years beginning after 15 Dec 2024) for CCPCs and eligible Canadian public corporations; limit shared across associated groups and reduced from C$15M taxable capital
- Claim filed with the corporate tax return (Form T661); strict reporting deadlines
- Optional pre-claim approval now available before starting the work
Eligibility
- Where
- Canada
- Stages
- pre-seed, seed, series-a, growth
- Needs VC/accelerator backing
- No
- Needs partner referral code
- No
- Must be incorporated
- Yes
- AI focus required
- No
- Students / researchers
- Not eligible
- Nonprofits
- Not eligible
Also required
- Benefit arrives as tax credit/refund after year-end, not upfront cash
How to apply
Track eligible R&D costs, file Form T661 + Schedule 31 with your T2 return; optionally request pre-claim approval from CRA first.
- Benefit
- cash
- Equity-free
- Yes
- Decision time
- —
- Credit validity
- —
- Deadline
- Rolling (claim with tax return, within reporting deadline)
- Status
- Open
Verified 2026-10-22 · source