This is a SR&ED guide for the CRA’s Scientific Research and Experimental Development Tax Credit Program (SRED or SR&ED). Each year, this program allocates over $4B to about 20,000 claimants. The program, while largely accessed by SME’s, is intended to encourage all businesses to conduct research and development that will lead to new, improved or technologically advanced products, processes, devices, and materials. See the full SR&ED definition from the CRA here.
At your corporation, are you conducting work that requires constant problem solving? Good news, there is a specific tax credit program for subsidizing that sort of risk taking up to Eligible Expenditures (yes, it is a huge amount of money. Imagine going from 3 development staff to 2 staff for the same cost, how much more could you accomplish?).
Please note that this guide is general advice and doesn’t constitute financial or professional advice as it doesn’t take into account your specific circumstances and shouldn’t be acted on without a full understanding of your current situation. It is strongly recommended that you talk to us in most cases as there are significant risks that are not discussed within the guide. I.E. Don’t sue us please and thank you.
This SR&ED guide was published in July 2020. As such, it includes every single exciting, edge of your seat CRA update up until that point. While this guide may not be on your book clubs top ten list, the suggestions, templates and case studies can certainly assist you in gaining an understanding of SR&ED. Our goal in publishing this guide is to help you maximize your tax credit while making sure your claim is fully documented and audit ready.
As new updates are released, we will update the SR&ED guide and let you know which sections have been updated here.
Updated policies related to SR&ED:
Updated policies related to SR&ED:
The CRA has updated the Investement Tax Credit Form. Check out the new T2SCH31 here.
New guidelines designed to make it easier for businesses to assess whether their work and associated projects are eligible for the SR&ED program.
As part of COVID-19 measures, filing due-dates for corporate income tax returns for tax year0-ends from Nov. 30th 2019 to Feb 29th, 2020 have been extended. However, how this applies, if at all, is different province to province. Full details here.
The Guidance: How the Canada emergency wage subsidy affects SR&ED claims is now available to help SR&ED claimants, who are also Canadian emergency wage subsidy (CEWS) recipients, determine how the CEWS might affect their SR&ED claim.
The Canada Revenue Agency has updated the following guide and it is available on Forms and publications:
The SR&ED Filing Requirements Policy has been updated on November 26, 2020.
The Canada Revenue Agency has updated the following forms and they are now available on Forms and publications:
The reporting deadlines for SR&ED claims have been extended due to COVID-19. For more information, read Extended SR&ED reporting deadlines.
Part 3 of Bill C-20, entitled Time Limits and Other Periods Act (COVID-19), recently received royal assent. If the minister of national revenue issues an order, the SR&ED reporting deadlines will be extended for up to six months starting from March 13, 2020, and not past December 31, 2020. Since this order has not yet been issued, claimants with a SR&ED reporting deadline on or after March 13, 2020, and who were unable to file an SR&ED claim because of the COVID-19 pandemic, are encouraged to file their claim on the expectation that such an order will be released. Claimants are encouraged to submit their SR&ED claims as early as possible, preferably with their income tax return. For more information on federal draft legislation amending the Income Tax Act that impacts on the SR&ED Program, go to Federal SR&ED legislative proposals status.
Reporting deadlines for the SR&ED tax incentive program have not changed. There is some confusion in the business community, due to COVID, around filing dates. The CRA published this non-change update to ensure that everyone understands filing dates for SR&ED remain the same. Corporations, while still encouraged to file their SR&ED claim with their income tax return (T2), still have up to 18 months to file their SR&ED claim after their tax year end. The tax filing season was extended to June 1, 2020.
The emergency measures put in place for employers can affect your SR&ED claim. Specifically the Canada Emergency Wage Subsidy and the 10% Temporary Wage Subsidy for Employers are considered government assistance. The amounts received through these programs reduces the amount of expenses eligible for SR&ED tax credits. This also applies to tax credits for the film and media industries.
The CRA has updated their summary on the SR&ED programs for each Province and territory. This is a very thorough and concise list of each program Provincial and territorial program complete with programs for each area, amounts and supporting details.
SR&ED Program v 3.0 – Privacy and impact assessment summary. The CRA and government takes privacy seriously. They are in a challenging spot because it is their duty to disperse SR&ED funds fairly and legally. This document explains in excruciating detail how they use your personal data to verify your details, how you can be punished for omitting details and the level of risk at each stage.
T2SCH31 Investment Tax Credit - Corporations
T661 Scientific Research and Experimental Development (SR&ED) Expenditures Claim
T2SCH49 Agreement Among Associated Canadian-Controlled Private Corporations to Allocate the Expenditure Limit
Do you have a visual impairment and need to order an alternative form of your SR&ED forms? Do so here.
All CRA updates for the SR&ED tax credit program can be found here.