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The SR&ED Program, administered by the Canada Revenue Agency (CRA), annually allocates over $3 billion in tax incentives to over 20,000 claimants, solidifying its position as Canada’s most substantial federal program supporting business research and development (R&D). Ensure you’re navigating this opportunity effectively.
How we help
Introduced in 1944, the Scientific Research & Experimental Development (SR&ED) program remains at the forefront of Canada’s innovation strategy. It’s designed to foster growth in R&D sectors by:
What you need to know
The 2025 Federal Budget introduces important enhancements to the SR&ED program. These changes significantly increase the value of refundable tax credits and broaden opportunities for Canadian businesses investing in research and development:
The 35% enhanced refundable tax credit can now be earned on up to $6 million in qualifying expenditures (previously $3 million, and more recently $4.5 million). This significantly expands the benefit for qualifying Canadian-Controlled Private Corporations (CCPCs), who can now claim up to $2.1 million annually in fully refundable credits.
The federal budget confirms increases to the taxable capital thresholds used to determine access to the enhanced credit:
From $10 million to $15 million for the lower limit
From $50 million to $75 million for the upper phase-out limit
Eligible Canadian public corporations continue to benefit from the enhanced 35% refundable tax credit on qualifying SR&ED expenditures, aligned with the updated $6 million expenditure limit.
The eligibility of capital expenditures (infrastructure, equipment, and machinery) has been restored: These costs will be eligible for both the deduction against income and the investment tax credit components. Applies to property acquired and lease costs that become payable on or after the 2024 Fall Economic Statement date.
All SR&ED program changes announced in the 2025 Federal Budget apply to taxation years beginning on or after December 16, 2024
What Sets Us Apart
Developing new methods or original products that weren’t previously available.
Elevating the performance, efficiency, or reliability of existing products or processes.
Engaging in activities that resolve scientific or technological uncertainties.
industries
Almost every Industry has the potential to tap into the benefits of the SR&ED program. Common industries include:
Fueling innovation
Secure significant financial returns, providing more room for further investment.
Dedicate more resources to R&D, leading to market disruptions.
Attract investors with
substantial R&D focus and potential returns.
Use the credits to reduce prices, increase marketing activities, or enhance product quality.
What counts as SR&ED costs
Incremental overhead expenses are calculated and added in the pool of eligible expenses.
Special Note: Costs related to software, such as licenses or development tools, can predominantly be claimed under this method.
Calculates 55% of direct SR&ED salaries as incremental overhead expenses.
Restrictions: This method prohibits the claim of capital and lease expenditures.
Answered by experts
All you need to know about SR&ED Tax Credit
Yes, there are substantial differences in how Canadian-Controlled Private Corporations (CCPCs) and Non-CCPCs receive returns on their Scientific Research & Experimental Development (SR&ED) expenditures.
● CCPCs qualify for up to 35% Federal return on SR&ED-related expenditures based on taxable capital of the last fiscal year of the company, received as a direct, one-time cash refund.
● Non-CCPCs, on the other hand, obtain a 15% Federal return on their SR&ED expenditures. Unlike CCPCs, this return is not in cash but in the form of a credit refund. This credit can only be utilized against corporate taxes owed and can be carried forward for up to 20 years or applied retroactively for up to 3 years to recover taxes paid.
Why and How SR&ED is conducted are two requirements to be met.
WHY?
For the advancement of scientific knowledge or to achieve technological advancement:
• Generation or discovery of knowledge that advances the
understanding of technology.
• This is conceptual knowledge (theories, prediction models,…), not factual knowledge (data or measurements).
• New knowledge is needed when it is unknown whether a result or objective can be achieved, due to an insufficiency in the available scientific or technological knowledge.
• The recognition of that unknown is the starting point of the SR&ED work, and the advancement the targeted outcome.
•If the uncertainty is not addressed or is circumvented with a workaround, the work is not eligible.
HOW?
Systematic investigation or search by means of experiment or analysis:
• Different than a systematic approach to carrying out work.
• Eligible approach consists in generating an idea consistent with known facts serving as a starting point for further investigation. The idea can be a possible solution to a problem, a proposed method or an approach (hypothesis).
• It involves testing the idea by means of experiment or analysis. The idea can evolve as a result of the testing.
• Must draw logical conclusions based on the results of the experiment.
• Evidence must be kept that is generated as the work progress.
Review your hypothesis and uncertenties together with your team. Assess what was known and what was unknown, including tools and methodologies, at the inception of your project. Discuss the claim with your SR&ED advisor. You can choose Leyton as your SR&ED advisor, our consultants are available to attend meetings, offering valuable insights and additional resources to support your claim.
A review is not a tax audit, it is typically just a standard procedure to verify the accuracy of the details submitted on your return.
Our SR&ED consultants are here to help! Promptly responding and supplying the requested information is crucial. It enables the CRA to expedite the review of your file effectively and efficiently.
At Leyton, we leverage our profound understanding of the SR&ED program to provide comprehensive services across all Canadian regions:
● SR&ED Claim Optimization: We identify eligible SR&ED activities specific to your operations, aiming to maximize your claim while ensuring full compliance with CRA standards. Our team collaborates with yours to gather essential documentation, develop project descriptions, and structure your claim effectively.
● SR&ED Documentation Enhancement: We assist clients in implementing enhanced methodologies to meet current and future technical and documentation requirements, ensuring seamless claim submissions.
● SR&ED Claim Advocacy: With our in-depth knowledge of program guidelines, we adeptly negotiate and resolve disputes with CRA on behalf of our clients, striving to achieve the best possible outcomes.
At Leyton, Leyton for Me is our cutting-edge platform, innovatively crafted by our in-house Tech Lab, designed to streamline the SR&ED (Scientific Research & Experimental Development) claim process. With “Leyton for Me”, you gain real-time insights into your R&D projects, ensuring you’re always in the loop. Collaboration with our consultants has never been easier, and we’ve put paramount importance on data security with top-tier encryption protocols. Our intuitive history feature lets you revisit any interaction, ensuring complete transparency. Should you have any questions or face challenges, rest assured, our dedicated team is always ready to assist. Our commitment at Leyton is clear: to revolutionize the R&D claims process, making it efficient, secure, and user-centric.
Eligible support work for the SR&ED Tax Credit Program includes:
● Engineering
● Design
● Operations Research
● Mathematical Analysis
● Computer Programming
● Data Collection
● Experiment
● Psychological Research
Regardless of your location, be it Montreal, Toronto, Calgary, or Vancouver, Leyton’s specialized consultants are dedicated to ensuring that every eligible aspect of your innovative endeavors receives the support it deserves. Whether you need assistance with personal income tax, supporting documents, filing a claim, managing your tax return, or handling your bank account with tax owed, we have your specific needs covered.
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