Federal SR&ED 

Support and stimulate the research and technological innovation efforts of businesses.

The ITC for Scientific Research and Experimental Development (SR&ED) is the main tax incentive in Canada and is aimed at supporting and stimulating companies’ research and technological innovation initiatives. May be earned in the year on qualified SR&ED expenditures of a corporation, ranging from 35% for Canadian-controlled private corporations (CCPCs) to 15% for other companies.

Who can benefit from the SR&ED Investment Tax Credit?

Any industrial, commercial, or agricultural company subject to Canadian taxes and permanently established in Canada can benefit from the program. Around 75% of claimants are small and mid-sized businesses.

Calculation

  • For Canadian-controlled private corporations (CCPCs): 35%, refundable, up to $3,000,000 of eligible yearly expenses, reduced to 15%, non-refundable, for any additional amount,
  • The $3,000,000 limit depends on the taxable capital of the company and all associated companies for the previous fiscal year,
  • For other companies: the tax credit is not refundable and is equal to 15% of SR&ED expenses.

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Qualified expenditures

  • Human resource costs: wages and salaries,
  • Overhead costs: actual costs or 55% of personnel costs,
  • Costs of materials consumed or transformed for SR&ED projects,
  • External SR&ED contracts (80% for arms-length sub-contractors),
  • Payments to third parties: to a university, a college or other accredited institution.

What are the advantages of working with FI Group?

Tailor-made support

We support you from A to Z, from identification to valuation then securing as well as support in the event of an audit:

  • Consultants, all engineers, or doctors specializing in your fields of activity,
  • A team of tax lawyers,
  • A dedicated project team and contact.

 

A solid approach
  • Certifications ISO 9001 and ISO 27001,
  • Analysis of the project and the expenditures eligibility according to the legislation in force in Canada.

An Internacional presence

We offer our customers a global approach to R&D funding by being present in 14 countries around the world: Belgium, Brazil, Canada, Chile, Colombia, France, Germany, Italy, Japan, Portugal, Singapore, Spain, the United Kingdom, and the United States.

Provincial SR&ED 

R&D tax credits available at the provincial level can be combined with the federal incentive.

Most provinces and territories forming the regional governments of Canada offer additional programs to support SR&ED that supplement the federal program.

These provincial R&D tax incentives are offered to all companies with specific rates depending on the type of company, with eligible SR&ED activities being the same as those defined at the federal level.

See below details of the incentives offered by each province:

Which tax credit by province?

Innovation Employment Grant: Refundable tax credit for eligible expenses incurred in Alberta by a company permanently established in this province.

Eligible expenses

The same eligible expenses as the federal program and the ITC.

Rate

  • 8% payment for eligible R&D spending carried out in Alberta, up to the corporation’s base level of spending.
  • Enhanced 20% payment for eligible R&D spending that exceeds the corporation’s base spending level.

Corporation’s base level of spending = corporation’s average qualifying R&D spending over the previous 2 years. The grant provides benefits on up to $4 million in annual R&D spending.

Refundable tax credit for CCPCs up to $3,000,000 of expenses, and non-refundable otherwise, for expenses incurred in British Columbia by a company permanently established in this province.

Eligible expenses

Same eligibility as the federal SR&ED, considering only expenditures incurred and work performed in British Columbia.

Rate
10% for all companies.

Refundable tax credit for eligible expenses incurred in Manitoba with an eligible research institute by a company permanently established in this province. 50% refundable for internal R&D expenses.

Eligible expenses

Same eligibility as the federal SR&ED, considering only expenditures incurred and work performed in Manitoba. Capital expenditures are also eligible.

Rate
15% for all companies.

Refundable tax credit for eligible expenses incurred in New Brunswick by a company permanently established in this province.

Eligible expenses

Same eligibility as the federal SR&ED, considering only expenditures incurred and work performed in New Brunswick.

Rate
15% for all companies.

Refundable tax credit for eligible expenses incurred in Newfoundland and Labrador by a company permanently established in this province.

Eligible expenses

Same eligibility as the federal SR&ED, considering only expenditures incurred and work performed in Newfoundland and Labrador.

Rate
15% for all companies.

Refundable tax credit for eligible expenses incurred in Nova Scotia by a company permanently established in this province.

Eligible expenses

Same eligibility as the federal SR&ED, considering only expenditures incurred and work performed in Nova Scotia.

Rate
15% for all companies.

  • Ontario Research and Development Tax Credit (ORDTC): 3.5%, non-refundable tax credit carried forward for 20 years.
  • Ontario Innovation Tax Credit (OITC): 8% refundable tax credit, up to $ 3,000,000 expenditures, limit based on prior year’s federal taxable income and taxable capital for the company and all associated companies.
  • Ontario Business Research Institute Tax Credit (OBRITC): 20% refundable tax credit for qualified expenditures on SR&ED work performed in Ontario under contract with eligible research institutes.

Eligible expenses

Same eligibility as the federal SR&ED, considering only expenditures incurred and work performed in Ontario.

Refundable tax credit for eligible R&D salary expenses incurred by the corporation.

Eligible expenses

  • R&D Salaries,
  • 50% for SR&ED sub-contractors.

Rate

  • Up to 30% for CCPCs for the first $3,000,000 of expenditures,
  • 14% for other companies and expenditures above $3,000,000 for CCPCs.
  • Excluded amount between $50,000 and $225,000$, based on prior year’s assets of the company.

Other tax credits at 14%, refundable

  • Tax credit for university research or research carried out by a public research center or by a research consortium,
  • Tax credit for precompetitive research in a private partnership,
  • Tax incentive contribution to a research consortium.

Refundable tax credit for CCPCs up to $1,000,000 of expenses, and non-refundable otherwise, for expenses incurred in Saskatchewan by a company permanently established in this province.

Eligible expenses

Same eligibility as the federal SR&ED, considering only expenditures incurred and work performed in Saskatchewan.

Rate
10% for all companies.

Refundable tax credit for eligible expenses incurred in the Yukon by a company permanently established in this province.

Eligible expenses

Same eligibility as the federal SR&ED, considering only expenditures incurred and work performed in Yukon.

Rate

  • 15% for all companies,
  • +5% for expenses incurred with Yukon College.