SR&ED Tax Credit

The SR&ED program helps businesses recover a portion of the costs they invest in research and development. If your company is tackling scientific or technological challenges, whether through prototypes, testing, software development, or process improvements, you may be eligible.

Your work must aim to resolve technological uncertainty through a systematic process of experimentation or analysis, and you need to maintain detailed documentation throughout the investigation. Ayming turns SR&ED into a powerful tool to fuel innovation while improving your bottom line.

Any business with a permanent establishment in Canada conducting eligible SR&ED activities within Canada may qualify for the SR&ED tax credit, regardless of size or industry. Whether you are a small startup or a large enterprise, if you are conducting eligible R&D activities, you may qualify.

Canadian-controlled private corporations (CCPCs) benefit the most, with access to enhanced refundable credits, but public companies, foreign-owned corporations, partnerships, sole proprietors, and even individuals can also claim SR&ED, provided the work is done in Canada and meets CRA’s eligibility criteria.

At Ayming, we help businesses of all sizes and sectors navigate these rules, ensuring that projects pushing technological boundaries or solving scientific uncertainties can take full advantage of SR&ED.

When it comes to SR&ED, a wide range of expenses can translate into valuable tax credits for your business. Eligible costs include salaries and wages for employees directly involved in R&D, overhead tied to qualified work, and payments to Canadian companies performing SR&ED on your behalf. You can also claim materials consumed or transformed during the process, as well as contributions to universities, colleges, or research labs carrying out research for you. While most SR&ED activities must be conducted in Canada, certain expenditures abroad may qualify under strict conditions. With Ayming’s guidance, you can be confident you’re capturing every eligible expense and maximizing the true potential of your claim.

Calculating the SR&ED tax credit depends on several factors, including your business type, province, and the amount and type of eligible R&D expenditures. When preparing your SR&ED claim, it’s important to choose the calculation method that best suits your business’s needs. You must also ensure that expenditures claimed under the SR&ED program are not also claimed under other government funding programs for the same purpose, a practice commonly referred to as “double-dipping.” This means that if you’ve already received a grant, subsidy, or tax credit from another federal, provincial, or municipal program to cover certain R&D costs, those same costs cannot be fully claimed again under SR&ED.

In such cases, you are typically required to reduce your eligible SR&ED expenditures by the amount of assistance received. Failing to do so can result in the denial or reduction of your SR&ED claim and possibly trigger penalties or audits from the CRA.
To stay compliant and maximize your total funding, it’s important to strategically coordinate multiple funding sources, ensuring that each program supports different aspects of your R&D activities or cost categories without overlap.

To ensure you maximize your return and stay compliant, work with Ayming Canada to help calculate your SR&ED tax credit and guide you through the process.

SR&ED Investment Tax Credit (ITC) is one of the most valuable ways to reduces Part 1 tax liability through by earning credits for on qualified research and development expenses. Depending on your company’s size and structure, tThese credits can be either non-refundable or refundable, making them flexible tools for growth.depending on the company’s structure and size.

Eligible small and medium-sized CCPCs may qualify for the enhanced 35% refundable rate, which is especially powerful for start-ups or companies not yet profitable, delivering cash flow even without taxable income. Larger corporations and those in a loss position benefit from the basic 15% rate, with non-refundable credits that can be carried forward for up to 20 years, strengthening long-term tax planning.

At Ayming, we simplify the complexities of SR&ED to ensure you capture the maximum benefit possible. By aligning SR&ED with your financial strategy, we help you unlock immediate stability, improved cash flow, and long-term growth opportunities.

To secure your SR&ED benefits, your corporation must submit the required CRA forms: Form T661 and Schedule T2SCH31 within 18 months of your tax year-end. These forms detail your eligible expenditures and the ITCs earned, and must be included with your corporate T2 tax return, along with any applicable provincial schedules. With Ayming’s guidance, you can navigate this process smoothly, ensuring your claim is complete, accurate, and positioned to maximize your funding.

Yes, the refundable SR&ED tax credit are considered business income and must be reported in year they are received. For non-refundable SR&ED tax credits, only the portion used to reduce the Part 1 tax liability in the prior year is added to tincome. Any unused credits are carried forward are included in the year they are applied. In other words, SR&ED credits help reduce your taxes today but are still accounted for in future taxable income.

It’s also important to note that most forms of government support, including provincial R&D tax credits, grants, and subsidies, are generally taxable unless specifically exempt.

With Ayming’s expertise, you can navigate these rules confidently, plan strategically, and maximize the financial impact of your SR&ED and other innovation incentives while avoiding unexpected tax surprises.