SR&ED (Scientific Research & Experimental Development) is a government program administered by the Canada Revenue Agency which reimburses companies doing innovative research in Canada for some of their expenses on that research. The SR&ED program currently gives approximately four billion dollars per year back to Canadian companies for the research they’ve done in Canada.
SR&ED credits are generally refundable, which means that if you don’t owe any tax, CRA will send you a cheque. There’s a federal component to SR&ED and a provincial component. The federal component is always refundable and in many cases the provincial component is also refundable.
Canadian Controlled Private Corporations (CCPCs) doing innovative research in Canada in any of dozens of qualifying areas of research could qualify to apply for SR&ED credits. SR&ED reimburses T4 income paid to employees doing research and development. The program also reimburses consulting payments at a lower rate. The SR&ED program is best suited to businesses who pay T4 income to staff working in Canada on innovative scientific research and experimental development.
One of the most common misconceptions about SR&ED is that only companies in certain sectors can receive SR&ED credits. The truth is that almost any company doing innovative scientific research and experimental development in Canada can participate. There are literally dozens of areas of research that qualify for SR&ED applications. Tech companies, manufacturing companies, biotech companies and many others all participate in the SR&ED program.