Help! What SR&ED Activities Can I Claim?

June 11, 2013 SRED

Updated to Reflect New Policies (2022)

* Some of the policies referenced were updated 2021-08-13. This article has been updated and is accurate as of 2022. *

Having issues understanding what work activities are eligible for your SR&ED tax credit application?

One of the biggest hurdles faced by prospective SR&ED tax credit applicants is knowing exactly what SR&ED activities the CRA considers eligible.

Here we provide a short rundown of the four SR&ED activities that are eligible to claim: basic research, applied research, experimental development, and support work.

What SR&ED Activities Can I Claim?

Basic Research

CRA definition: Work undertaken for the advancement of scientific knowledge without a specific practical application in view.¹

In layman’s terms: Science for the sake of science. Basic research doesn’t have an exact end in mind, nor a specific problem it’s trying to solve. Basic research is carried out solely for the purpose of scientific discovery outside of the status quo.

Fun fact: Perhaps the most famous example of basic research is when Alexander Fleming decided to study a mould he found on a petri dish, which led to the discovery of penicillin.²

Applied Research

CRA definition: Work undertaken for the advancement of scientific knowledge with a specific practical application in view.³

In layman’s terms: Applied research is carried out to solve a specific problem. If you own a car company and find that your cars are too slow, applied research uses experimentation to answer the questions “Why are they slow?” and “What can we do to make them faster?”

Fun fact: Applied research often comes from basic research. Fleming may have stumbled upon penicillin with basic research, however, the development of its many uses falls under applied research.

Experimental Development

CRA definition: Experimental development is work undertaken for the purpose of achieving technological advancement for the purpose of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto.⁴

In layman’s terms: The goal of any SR&ED project is to fill a technological gap, whether that’s revolutionizing a production process or increasing productivity.

Fun fact: Experimental development is, by far, the most commonly claimed category of work.⁵

Support Work

CRA definition: The work identified in paragraph (d) of the definition of SR&ED is usually referred to as support work. Work with respect to the eight categories listed in paragraph (d) does not constitute SR&ED on its own. However, if it is commensurate with the needs and directly in support of basic research, applied research or experimental development work undertaken in Canada, it falls within the meaning of SR&ED.⁶

In layman’s terms: If you administered any work that falls under the above categories (basic or applied research and experimental development) in support of your SR&ED efforts, you can claim it.

Fun fact: This is easily the most overlooked of the four categories. Make sure you claim all you can. Keep in mind that support work must be combined with one of the above activities to be eligible – it doesn’t stand alone.

Additionally…

Be sure you’re familiar with the concept of “directly in support of” from the SR&ED Glossary:

Within the context of SR&ED, work that is directly in support is work that was carried out specifically to perform the related basic research, applied research or experimental development.⁷

As well as “commensurate with the needs” from the SR&ED Glossary:

Within the context of SR&ED, work that is commensurate with the needs must be corresponding in the amount, size, extent, or duration that is necessary to carry out basic research, applied research, or experimental development.⁸