What’s Eligible under the SR&ED program?

Under the Scientific Research and Experimental Development (SR&ED) program, the Canada Revenue Agency (CRA) allows businesses to claim tax incentives for work that systematically investigates or experiments to achieve technological advancement. It’s not just about lab research—much of what qualifies happens in regular businesses solving tough technical problems.
Here’s a breakdown of what’s eligible under the SR&ED program:

✅ Eligible Work (Activities)

1. Experimental Development (More than 95% of SR&ED claims)
Efforts to achieve technological advancement for creating or improving materials, devices, products, or processes.
Example: Building a custom software system that pushes the limits of current tech or automating a process in a novel way.
2. Applied Research
Work undertaken to gain scientific knowledge with a practical application.
Example: Testing a new chemical compound for use in a new manufacturing process.
3. Basic Research
Work done to advance scientific knowledge without a specific practical application.
Example: Conducting experiments to understand fluid dynamics in general.
4. Support Work
Work that directly supports the above, such as engineering, design, data collection, testing, or programming.
Must be commensurate with eligible core work.

✅ Eligible Costs (Expenditures)

• Salaries and Wages for employees involved in eligible SR&ED work
• Subcontractor Fees for third parties performing eligible SR&ED activities
• Materials Consumed or Transformed in the course of the SR&ED
• Overhead and Administrative Costs (using the proxy method @ 55% labour cost)