What is the SR&ED tax credit?

The SR&ED tax credit, or “shred tax credit” as it’s lovingly dubbed, is a program created by CRA to incentivize companies contributing to the economy through Research and Development.

Companies are eligible to claim back up to 55%+ of eligible spending, and that includes salaries, subcontractors, and SR&ED relevant consumables. For many high-growth companies, it can add up to multiple hundreds of thousands or even millions of dollars.

To access the tax credit, a company has to have at least one completed financial year, in which the eligible spending has occurred. For the consultant to assess the refund, a company has to finalize their accounts and file their SR&ED tax credit claim, ideally as part of their T2 filing.

This approval process can take up to 60 days, or up to 6 months in the case of an inquiry.

What is an SR&ED tax credit loan?

The SR&ED Advance Funding option is a loan facility taken out against a company’s future SR&ED tax credit refund. The r&d financing option can be accessed up to half way through the fiscal year, is affordable and can be used even if you are pre-revenue. For more info on the SR&ED grant loan see our guide.

R&D tax loan

Is my company eligible?

Eligibility isn’t complicated but does take into consideration a number of circumstances relating to your company setup and operation, however generally if you fit the following criteria you should get in contact to discuss your options.

Canadian Controlled Private Corporation
Incorporated in Canada and paying salaries or contractors in Canada
Performing R&D with SR&ED eligible expenditure of over $200,000 per year