SR&ED Tax Credits
This guide covers how Canadian founders can claim SR&ED and provincial R&D credits well in 2026 to 2027: which software and AI work qualifies, what changed, eligible costs, documentation, the claim, pre-claim approval, cash flow, provincial stacking, CCPC status and how credits fit with IRAP and grants.
What should Canadian founders know about SR&ED in 2026?
The big tax-credit issue for 2026 to 2027 isn’t finding a loophole. It’s running the company, payroll, technical records and structure so you don’t leave refundable SR&ED and provincial credits unclaimed. SR&ED is now more valuable: the enhanced 35% refundable credit applies to up to $6 million of eligible spending a year (CRA SR&ED news and updates).
| Field | Entry |
|---|---|
| SR&ED | Candidate |
| Uncertainty | Merge across 3 offline devices? |
| Result | H1 failed under clock skew |
Federal base reduced by the Ontario credit. Illustrative.
| Program | Next |
|---|---|
| SR&ED | File with return |
| OITC | Schedule 566 |
| IRAP | Claim, Nov 15 |
It rewards real technical uncertainty and disciplined records, not routine development described as R&D. The program basics are on CRA’s SR&ED page.
Where should you start?
Check what qualifies, set up records, know your costs, then claim and stack. Each card opens the page for that step.
Not all product work is R&D.
Avoids: over-claimingSee the pageOne field in your tracker.
Protects: the claimSee the pageSalaries, proxy, contractors.
Grows: the baseSee the pageFederal and provincial together.
Avoids: surprisesSee the pageT661 within 18 months.
Protects: eligibilitySee the page60 to 180 days after filing.
Protects: runwaySee the pageBefore any round or flip.
Protects: the 35%See the pageCredits, IRAP and grants.
Avoids: double countingSee the pageBuilding in Ontario or B.C.? Add the provincial layer, and check the 2026 changes if your last claim was under the old limit.
Understand SR&ED
What SR&ED is, which software and AI work can qualify, and what changed in 2026.
Canada’s R&D tax incentive: who claims it, what it’s worth and how it pays out.
Read guideWhich SaaS work can qualify, which usually doesn’t, and how to tell the difference.
Read guideWhen AI and ML work can qualify, and why calling an API usually doesn’t.
Read guideThe $6M limit, the wider phase-out, capital expenditures and pre-claim approval.
Read guideClaim it well
Eligible costs, how much you get back, documentation, the T661, pre-claim approval and what happens after you file.
Salaries, the proxy method, contractors, materials and capital, with the key limits.
Read guideThe rates, the refund rules and a worked federal plus Ontario example.
Read guideOne field in your tracker, a monthly record and the evidence reviewers ask for.
Read guideForm T661, Schedule 31, the three project questions and the 18-month deadline.
Read guideAsk CRA about a project before you start it: who can apply and when it’s worth it.
Read guideWhen the cash arrives, what a CRA review involves and how to plan around it.
Read guideStack and protect it
Ontario and other provincial credits, CCPC status before financing, grants versus credits, and getting help.
8% refundable on Ontario SR&ED: limits, phase-outs, Schedule 566 and stacking.
Read guideB.C.’s permanent 10%, Ontario’s 8%, and what to check wherever you build.
Read guideHow rounds, US investors and a US flip can affect the refundable credit.
Read guideCredits vs grants vs incentives, how they interact, and one map to manage them.
Read guideWhen to use an advisor, how fees work, what to ask and what to keep in-house.
Read guideBuild the evidence while you build the product.
Do technically eligible work, keep records as it happens, pay people through the right entity and check your structure before financing.
Frequently asked questions
What is the SR&ED tax credit?
Canada’s federal R&D tax incentive: 35% refundable for qualifying CCPCs up to a $6M limit, and 15% otherwise.
Does software qualify for SR&ED?
Some does: work that resolves technological uncertainty through systematic investigation, not routine development.
What changed in SR&ED in 2026?
Bill C-15 raised the limit to $6M, widened the capital phase-out and restored capital expenditures; pre-claim approval launched.
Can I stack SR&ED with provincial credits?
Yes, but provincial credits reduce the federal base. Ontario adds 8% and B.C. 10% on eligible work.
How long does an SR&ED refund take?
CRA’s standard is 60 days for refundable claims accepted as filed and 180 days if reviewed.
Is this tax advice?
No. It is general information. Confirm decisions with a qualified Canadian tax and SR&ED advisor.
Sources & further reading
Standards and platform rules change. These sources let you verify the current requirements directly. All screens shown are mock-ups of fictional products.