Plain meaning
A tax incentive program for eligible research and development work carried on in Canada.
Also called
SRED
Key points
- SR&ED can provide income-tax deductions and investment tax credits for eligible scientific research and experimental development work carried on in Canada.
- The program is most relevant to businesses developing or improving products, processes, materials, devices, or technologies where technological uncertainty is being investigated systematically.
- Eligible costs can include certain salaries, materials, contracts, overhead, and third-party payments, depending on the facts and claim method.
- Claims are reviewed by the CRA and may involve both technical eligibility and financial-cost questions.
- Budget changes to SR&ED can affect business cash flow, innovation incentives, refundable credits, and the broader economy's research-and-productivity policy.
Why it comes up
SR&ED belongs mainly in the Business and Economy lens because it affects innovation-focused businesses, refundable and non-refundable tax credits, CRA compliance reviews, research spending, productivity policy, and the after-tax cost of developing technology in Canada.