SR&ED Tax Credits

The reward for performing SR&ED is a Tax Credit, often refundable.
  • For every $100 in actual expenditures an SME can receive between $45.60 and $75.20 in tax credits, depending on the type of expenditures made.

  • Salaries and wages paid to employees, fees paid for consultants who do research for you and material costs are the most common types of expenditures.  Certain types of capital expenditures and equipment rental may also qualify.
  • This credit can be used to pay taxes owing for the current year; carried back for up to 3 years and carried forward for 20 years.

  • To  the extent that the SR&ED credit is greater than the taxes owing, the difference will be refunded to most SME's.

  • Expenditures on projects that fail are also eligible for the SR&ED credit, provided they meet the criteria.

  • Even if the company loses money or owes no taxes, the refund is still paid.

  • For work carried out in Ontario, an Ontario Innovation Tax Credit (OITC) and an Ontario Research and Development Tax Credit (ORDTC) are also available.  These are also applied for through your Corporate Tax Return and are approved if the SR&ED submission is approved.

  • Salaries paid, contractor costs and materials used can qualify.

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