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R&D tax credits in Canada come through the SR&ED program. A Canadian-controlled private corporation that qualifies earns a 35% investment tax credit on up to $6 million of qualified spending a year, and 15% on anything above that. The $6 million limit applies to tax years that begin after 15 December 2024.
The credits sit inside the CRA’s Scientific Research and Experimental Development tax incentive program, which the CRA describes as meant to encourage businesses to do research and development in Canada. In short, you spend on qualifying work and the tax system gives some of it back.
How much do R&D tax credits pay?
It comes down to two rates and a limit. The basic rate is 15%. The higher rate is 35%, and the CRA says most CCPCs and eligible Canadian public corporations can earn it, up to the expenditure limit. This table shows the split.
| Item | What the CRA page says |
|---|---|
| Basic credit rate | 15% |
| Higher rate (most CCPCs and eligible public corporations) | 35% up to the expenditure limit |
| Expenditure limit, years beginning after 15 Dec 2024 | $6 million (it was $3 million before) |
| Refundable part at 35% | 100% of current spending, 40% of capital spending |
| Limit for large CCPCs | Shrinks once taxable capital passes $15 million, nil at $75 million |
| Unused credits | Carry back 3 years, forward 20 |
Individuals earn the credit at 15%, and the CRA lists 40% of it as refundable.
What does a claim look like in dollars?
Say a CCPC that qualifies for the higher rate spends $200,000 on qualifying salaries. That’s current spending, so the credit is 35% of $200,000, or $70,000, and the CRA treats the current-spending part as fully refundable. Change it to $8 million and the maths splits: $6 million at 35% is $2.1 million, and the other $2 million at 15% is $300,000. Total $2.4 million.
Those are credits earned, not cash in the bank on a set date. Tax, other credits and the refund rules all sit around them.
For a ballpark sense of scale, the corporate tax calculator puts tax on $100,000 of Ontario small business income at $11,696 for calendar 2026. Ontario changed its small business rate on 1 July 2026, so that figure is a prorated blend and we’d treat it as an estimate.
Who can claim, and what counts?
Corporations, individuals, trusts and partners in a partnership can claim. The partnership itself can’t. The costs that go into a claim include salary or wages, materials, contracts, overhead and payments to third parties.
Does your work count as SR&ED at all? That’s a separate test, and the CRA’s own pages set it out in detail. We didn’t try to condense it here, because a loose summary is how people claim things that fail a review, so read the CRA’s eligibility pages before you spend a dollar on a claim.
How do you file an SR&ED claim, and by when?
You describe the work and work out the spending on Form T661, and a corporation reports the credit on Schedule T2SCH31 with its T2 return. Send the claim with your income tax return for the year.
The corporate deadline is 18 months after the end of the tax year, which is the T2 due date (six months) plus 12 more. A December 2025 year end gives you until 30 June 2027. A June 2026 year end gives you until 31 December 2027, because the T2 is due 31 December 2026 and you add 12 months. Individuals have their own date, and we didn’t confirm it, so check the CRA page.
What should you have ready before you start?
Think of Aisha, who runs a small software firm in Waterloo and wants to claim for a year of development work. Before she opens the form she pulls together payroll records for the staff who worked on the project, invoices for any contractors, and notes on what technical problem the team was trying to solve and why it wasn’t routine. She also writes down which hours went to the project and which didn’t. Does that sound like a lot of homework? It is, and that’s the point: a claim lives or dies on its paperwork, so build the file while the work is happening, not two years later.
Where do R&D claims go wrong?
Missing the 18-month deadline is the hard one, because there’s no easy way back. Poor records come next. The CRA tells claimants to keep supporting documents, so track who worked on which project and when, as you go. Rebuilding that two years later is miserable.
If you run a big company, don’t assume you get 35%. The limit falls away as taxable capital grows. Provinces and territories run their own R&D credits as well, and the CRA has a page listing them. We didn’t confirm any provincial rate, so we’ve left them out.
What do consultants charge for claim work? We couldn’t confirm a typical fee. Ask for the price in writing, and ask what happens if the CRA reviews the claim.
Do you pay yourself through wages or a dividend? The dividend tax calculator shows what you’d keep on the dividend side. The payroll remittance calculator helps with the wage side of a claim.
Where we got these figures
The rates, limits, refundable shares and deadline are from the Canada Revenue Agency‘s SR&ED pages and the federal Department of Finance announcement of December 2024, read in September 2026. This is an independent guide, separate from any government body.
Frequently asked questions
What is the SR&ED program?
It's the federal program that gives tax incentives for eligible research and development done in Canada, as a deduction or an investment tax credit.
What is the SR&ED expenditure limit?
For tax years beginning after 15 December 2024 it is $6 million for the higher 35% rate. Before that it was $3 million.
When is the deadline to file an SR&ED claim?
A corporation has 18 months after the end of the tax year, on Form T661 and Schedule T2SCH31.
Can an individual claim R&D tax credits?
Yes. Individuals, trusts, corporations and partners in a partnership can claim, but a partnership can't claim itself.
Are there provincial R&D credits too?
Several provinces and territories have their own. The CRA lists them on one page, and we haven't confirmed any provincial rate.
- Canadian tax credits and government benefits explained
The difference between tax credits and benefits in Canada, how they're worked out from your return, and the calculators for the ones people claim most