Canadian R&D tax credits and incentives

The Scientific Research and Experimental Development (SR&ED) program encourages companies to conduct research and development in Canada by providing tax incentives. Administered by the Canadian Revenue Agency (CRA), the program provides two types of tax breaks – an income tax deduction and an investment tax credit (ITC).

Contact Kruze

Canada R&D Tax Credits

What research is eligible?

The SR&ED tax incentive is available for systematic research in the fields of science or technology that is conducted in Canada, and includes:

  • Basic research undertaken to advance scientific knowledge.
  • Applied research that advances scientific knowledge focusing on a specific practical application. 
  • Experimental development.that advances technology to create or improve existing materials, devices, products, or processes. 

After determining if the work is eligible for SR&ED, you can claim allowable expenditures. Those expenditures may include:

  • Salary or wages
  • Materials
  • Contracts for SR&ED
  • Overhead
  • Third-party payments

What benefits does SR&ED provide?

The program’s tax incentives work in two ways:

  • Income tax deduction. Qualified SR&ED expenses can be pooled and then deducted against current income, or kept and deducted in a future year. 
  • Investment tax credit (ITC). Your company can earn an ITC and use it to reduce current income tax, reduce income taxes in a prior year, or carry it forward to a future year. In some cases the credit may be refundable. Unused ITCs can be carried back three years, or carried forward 20 years, and applied against taxes payable. 

For eligible SR&ED projects, ITCs will be at least 15 percent and may be as much as 35 percent of the qualified SR&ED expenditures. Canadian-controlled private corporations (CCPC) can earn a refundable ITC at the enhanced rate of 35 percent on the first $3 million of qualified expenditures, and a non-refundable ITC at the 15 percent rate for amounts over $3 million. 

Non-Canadian or publicly owned corporations can earn ITCs at the basic 15 percent rate, and can use the ITC to reduce taxes owed. Non-Canadian companies can become eligible for SR&ED tax incentives by forming a Canadian subsidiary to perform eligible R&D work in Canada, either for themselves or on a contract basis for the parent company.

Find out if your research qualifies for SR&ED

More than 20,000 research projects qualify for SR&ED every year, and the program provides more than $3 billion in tax incentives annually. To help businesses determine their eligibility, the Government of Canada provides a free Self-Assessment and Learning Tool to help you determine if all or part of your research project qualifies for SR&ED and estimate the amount ITCs you may be able to claim. Much like the US Federal Research and Development Tax Credits (which you can estimate using our R&D tax credit calculator), you will need to provide information on the project, duration, type of research, and various costs associated with the research. If you have questions about the Canadian SR&ED tax benefit, please contact us.

READY TO CONNECT FOR A FREE CONSULTATION?

We are the experts at helping seed/VC-backed Delaware C-Corps with their accounting and finances!

Talk to an experienced accountant, not a generic sales person

 Kruze Consulting
Alex Janeck
 Kruze Consulting
Edith Silva
 Kruze Consulting
Randy Hall
Viz AI

$250M+ VC Funding Raised


"I had a great experience working with Kruze Consulting when we raised Series A. They know what VCs need to see, and how to present a startup’s books and finances. If you are going to raise venture capital, you need experts like Kruze."
Chris Mansi

Chris Mansi

CEO

Startup Venture Capital Assistance

With former venture capitalists on staff, our team is here to help you navigate the fundraising process and manage your board of directors

 Kruze Consulting
Scott Orn
COO | Former VC
 Kruze Consulting
Healy Jones
VP FP&A | Former VC
Pequity

Scale Remote Operations & Team


"Kruze has supported us above and beyond basic accounting needs by ensuring we have everything we need to expand and support our team wherever they may be located"
Zack Fisch

Zack Fisch

Head of Operations & Legal

Clients who have worked with Kruze have collectively raised over $15 billion in VC funding.

We set startups up for fundrising success, and know how to work with the top VCs.

 Kruze Consulting
Vanessa Kruze, CPA
Founder & CEO
Kruze Logo

Experienced team helping you

Our account management team is staffed by CPAs and accountants who have, on average, 11 years of experience.

 Kruze Consulting
Bill Hollowsky, CPA
VP of Accounting Services
 Kruze Consulting
Claudine Vantomme, CPA
Controller
 Kruze Consulting
Morgan Avery
SUT/R&D Sr. Tax Accountant
 Kruze Consulting
Beth Bassler
Controller, CPA
Protara Therapeutics

Grew from a 2-person startup to a NASDAQ listed public company.


"The Kruze team helped us grow from a 2-person startup to a NASDAQ listed public company in 2 years. We wouldn’t have gotten public without Kruze’s support. Anyone thinking of launching a startup should make Vanessa their first call!"
Jesse Shefferman

Jesse Shefferman

CEO

Kruze Logo

Get in Touch

Please help us connect with you

How can we reach you?

Our first response is typically via email, so please check your inbox.

Help us have a productive first consultation by providing some additional information.

What year was your startup incorporated?

What is your stage of funding?

(pick up from the list)

Approximately how much funding have you raised?

(please enter a dollar value such as 5000000)

Help us understand what you are looking for:

(Optional, click the ones you need)

Anything additional that you’d like to share?

Optional - if you’d like to share anything else to help us prepare for our consultation, please let us know. We are also happy to sign an NDA, just let us know.

Important Tax Dates for Startups

  Talk to a leading startup CPA