Program guide · Canada
How to claim the SR&ED tax credit
The Scientific Research and Experimental Development (SR&ED) program is Canada's biggest support for business R&D. It's a tax credit, not a grant: you claim it with your tax return after you've done the work.
By Sameena Velshi · Updated October 30, 2026 · Checked against the official program pages that day
The short answer: check that your work tried to resolve a real technological uncertainty through systematic experiments, keep dated records as you go, then file Form T661 and Schedule 31 with your corporate tax return. You have until 12 months after your return is due (18 months after year-end for most corporations). Most Canadian-controlled private corporations earn a 35% refundable credit on up to $6M of eligible spending a year.
At a glance
| Run by | Canada Revenue Agency (CRA) |
|---|---|
| Who can claim | Corporations, individuals and trusts doing SR&ED in Canada. Partnerships allocate the credit to their partners |
| What it's worth | 35% for most Canadian-controlled private corporations on up to $6M a year (tax years starting after Dec 15, 2024); 15% above the limit and for other claimants |
| Refundable? | Qualifying CCPCs get 100% of the 35% credit on current spending back as cash; capital spending is 40% refundable |
| How to claim | Form T661 plus Schedule 31 (corporations) with your T2 return |
| Deadline | 12 months after your tax return is due: 18 months after year-end for most corporations. No late claims |
| Refund time | 60 days if accepted as filed; 90–180 days if reviewed |
| Approval in advance | Optional pre-claim approval for businesses under $25M in gross income, decided within 8 weeks |
How to claim, step by step
Check your work qualifies
The work must seek a scientific or technological advancement, face uncertainty that standard practice couldn't resolve, and follow a systematic process: hypothesis, testing, conclusions. CRA's free Self-Assessment and Learning Tool helps you check and estimate the credit.
Optional: ask for pre-claim approval
Since April 1, 2026, Canadian corporations and partnerships with gross business income under $25M can get up to 3 projects approved in advance through My Business Account. CRA aims to decide within 8 weeks. You still file a claim afterwards.
Group the work into projects and keep records
Keep dated plans, test results, lab notebooks, source code history, timesheets and invoices as you go. They're what CRA asks for in a review.
Calculate your eligible costs
Salaries for time spent on SR&ED, materials consumed, arm's-length contractors, and either actual overhead or the proxy amount (55% of the SR&ED salary base). Subtract other government funding, such as IRAP.
Complete Form T661 and Schedule 31
T661 describes each project (uncertainties, work done, advancements) and the costs. Corporations claim the credit on Schedule 31; individuals use T2038(IND). Use the current version of the forms.
File with your tax return
File electronically with your T2 return, or with an amended return, before the deadline. CRA recommends filing at least 90 days early. It may accept the claim as filed or review it.
What qualifies and what doesn't
Qualifies
- Basic and applied research
- Experimental development, including incremental improvements
- Support work that directly supports the above: engineering, design, programming, testing, data collection
- Work that failed, if you learned something new about the technology
Doesn't qualify
- Market research and sales promotion
- Routine testing and quality control
- Style changes and routine data collection
- Social sciences and humanities research
- Commercial production, training, or buying know-how
Eligible costs
| Cost | How it counts |
|---|---|
| Salaries and wages | Time spent on SR&ED, whatever the job title. Must be paid by year-end or within 180 days after. |
| Materials | Consumed or transformed in the work, in the year they're used. |
| Contractors | Arm's-length contracts earn the credit. Non-arm's-length contracts are deductible but earn no credit. |
| Overhead | Either actual costs (traditional method) or a proxy of 55% of the SR&ED salary base. You choose when you file and can't change it later. |
| Equipment | Capital bought after Dec 15, 2024 counts again if used more than 90% for SR&ED. |
What to have ready
- Project plans and the technical questions you set out to answer
- Dated test results, lab notebooks, prototypes, photos or source code history
- Timesheets showing who worked on SR&ED and for how long
- Payroll records, invoices and contracts
- Details of any government funding (IRAP and others) received for the same work
- Last year's financial statements and your T2 return
Common mistakes to avoid
- Missing the deadline. After 12 months past your return's due date, CRA accepts no changes and the credit is lost.
- Claiming routine work. Building with known methods, even if hard, isn't SR&ED.
- Writing records after the fact. Dated, contemporaneous records are what hold up in a review.
- Leaving Part 9 of T661 incomplete when someone prepares the claim for you: it can mean a $1,000 penalty.
- Forgetting to subtract IRAP and other government funding from your costs.
Want help?
Let Grant Desk organize your SR&ED claim
Grant Desk keeps your SR&ED projects, records and costs in one place, flags what each project still needs, and drafts the T661 project descriptions with AI for you and your accountant to review. You review and submit everything yourself, and funders make their own decisions. Free for Fractional COO clients, non-profits and artists.
Common questions
Does the project need to succeed to qualify for SR&ED?
No. Learning that an approach doesn't work can count as a technological advancement.
What is the SR&ED deadline?
12 months after your tax return is due. For most corporations that's 18 months after the end of the tax year.
Is software development eligible for SR&ED?
Only if it tried to resolve a technological uncertainty through systematic investigation. Routine programming with known methods doesn't qualify.
How long does an SR&ED refund take?
CRA's standard is 60 days if the claim is accepted as filed, and 90 to 180 days if it's reviewed.
Can I get SR&ED approved before I start?
Yes, through pre-claim approval if your gross business income is under $25M. CRA aims to decide within 8 weeks.
Can I claim SR&ED and get IRAP too?
Yes, but the IRAP funding reduces the costs you can claim and so the credit.
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This guide is general information, not legal, tax or financial advice. Rules, amounts and dates come from the official program pages on October 30, 2026 and can change without notice. Always confirm on the official page before you apply. Ravel Strategy Group is independent and is not affiliated with or endorsed by any government department, agency or funder named on this page.