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SRED tax credits (officially SR&ED) give a Canadian-controlled private corporation a 35% investment tax credit on qualified research spending, up to $6 million a year. Current spending inside that limit is 100% refundable, so the company gets cash even if it owes no tax. Go past the limit and the rate falls to 15%.
How much do SRED tax credits pay?
Who you are and how much you spend decide it, and the table below pulls together the pieces the CRA lists on its investment tax credit page, from the rates to how long an unused credit lasts.
| Item | What the CRA says |
|---|---|
| Higher rate | 35% for most CCPCs and eligible Canadian public corporations, up to the limit |
| Basic rate | 15% for everyone else, and for spending above the limit |
| Expenditure limit | $6 million, for tax years beginning after December 15, 2024 (it was $3 million) |
| Refundable share, current spending within the limit | 100% |
| Refundable share, capital spending and amounts above the limit | 40% |
| Limit starts to shrink | Taxable capital of $15 million, nil at $75 million |
| Unused credit | Carried back 3 years or forward 20 years |
Public corporations only became eligible for the 35% rate in tax years that begin after December 15, 2024. Before that, it was a private company benefit.
What does a claim look like in dollars?
Say a small software company has $200,000 of qualified spending in a year and sits well under the limit. At 35%, the credit is $70,000. Current spending is fully refundable for a CCPC, so that amount can come back as cash, and it doesn’t wait for a tax bill to exist. You can check the arithmetic in the percentage calculator.
At the top end, $6 million of spending earns at most $2.1 million at the 35% rate. Anything above that earns 15%, and only 40% of that part is refundable.
One catch. “Qualified” doesn’t mean “everything the R&D team cost”. The CRA has a separate page on which expenditures count, and the credit is worked out on that smaller number. We didn’t go through that list here, so read it before you budget around a figure.
When is the SRED claim due?
Later than most people think, but not forever. A corporation has until 12 months after its T2 return is due, and the T2 is due six months after year end. So for a December 31, 2025 year end, the T2 was due June 30, 2026 and the SRED claim is due June 30, 2027.
Individuals with business income have until 12 months after June 15 following the tax year. The claim is Form T661, plus Schedule T2SCH31 for a corporation or Form T2038(IND) for an individual, to actually get the credit. The CRA also has a pre-claim approval option if you want an answer before you file. We haven’t checked how long that takes.
Where do SRED claims go wrong?
Usually in the paperwork. The CRA tells claimants to make sure the claim is complete, accurate and backed by evidence before it goes in. That means project descriptions, and it means records of who worked on what. A guess at the end of the year won’t hold up.
The second slip is assuming 35% for everyone. A company that isn’t a CCPC or an eligible public corporation gets the 15% basic rate. And the limit can shrink for large companies, so a fast-growing firm shouldn’t assume the full $6 million.
Third, the credit shows up in your books as well as your tax return. The corporate tax calculator shows the tax side of a small profit. To see whether a project pays after the credit, try the ROI calculator. If you’re hiring for the work, the payroll remittance calculator covers what you send the CRA on wages.
We didn’t cover any provincial research credits. Look at your province’s finance site for those.
Where do these numbers come from?
The CRA’s SR&ED pages on the investment tax credit and on submitting a claim, read in September 2026. The Department of Finance announced the $6 million limit in December 2024. This site has no connection with the CRA or any government body.
Frequently asked questions
What is the SRED tax credit rate?
The 35% rate is 35% for most Canadian-controlled private corporations and eligible Canadian public corporations, up to the expenditure limit. The basic rate is 15%.
What is the SRED expenditure limit?
It is $6 million for tax years beginning after December 15, 2024. It was $3 million before, and it shrinks for corporations with taxable capital above $15 million.
Is the SRED credit refundable?
For a CCPC, credits on current spending within the limit are 100% refundable. Capital spending and amounts above the limit are 40% refundable.
When do I have to file an SRED claim?
A corporation has 12 months after its T2 return due date, which is about 18 months after year end. You file Form T661 with Schedule T2SCH31.
Can a sole proprietor claim SRED?
Individuals can claim on Form T2038(IND) at the basic 15% rate. The 35% 35% rate is for corporations.
- 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
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.