Key Takeaway
Every $1 in R&D tax credit produces about $4 in long-term research investment. Companies in software, manufacturing, biotech, architecture and agriculture all qualify, but most miss eligible work sitting in their own development and testing phases.
Every $1 in R&D tax credit produces about $4 in long-term research investment. That’s the return at the economy level. At the company level, most businesses miss qualifying work they’re already doing.
This article walks through 10 Canadian companies that claimed SR&ED, then breaks down what qualifies in five industries and the mistakes that get claims cut. If you’re filing in the United States, the rules differ and we cover them in R&D tax credits in the US.
What counts as R&D for a tax credit?
Work qualifies when you’re resolving a technological uncertainty that your team can’t solve with standard practice. You have to be trying to advance something, not just build it.
Three things have to be true. The outcome was genuinely uncertain when you started. You worked through it systematically, testing approaches rather than guessing. And the knowledge you gained went beyond what was already publicly available.
Note what’s missing from that list: the project doesn’t have to succeed. Failed experiments qualify. In practice they’re the strongest evidence you have, because a dead end is hard to fake.
What work counts directly?
- Experimental research
- Prototype development
- Design innovation
- Data analysis on experimental results
- Technology development
- Scientific research
What supporting work counts?
Support work qualifies when it directly enables the experimental work. That covers engineering, design, computer programming, testing, data collection, operations research, and mathematical analysis.
Training and feasibility studies can count too, but only where they’re tied to a specific eligible project. Generic professional development doesn’t qualify.
Ten real SR&ED claim examples
1. GBatteries
GBatteries builds battery charging technology. SR&ED funding backed work that produced more than 60 patents and advances in lithium metal batteries. The uncertainty was concrete: how fast can you charge a cell without destroying its lifespan?
2. cStar Technologies Inc.
cStar develops wireless communication systems from Ontario. The company used R&D credits to fund experiments and secure patents on advanced wireless systems, where signal behaviour couldn’t be predicted from existing models.
3. AmacaThera
AmacaThera is a Toronto biotech working on post-operative pain relief. SR&ED funding kept its clinical trials running through COVID, when other funding dried up. Trials are a textbook case: you don’t know the result before you run them.
4. Wilder Harrier
Wilder Harrier makes pet food in Montreal. Its SR&ED work covered insect protein and upcycled produce, which meant reformulating around ingredients with no established processing baseline.
5. Hydrogen in Motion Inc.
Hydrogen in Motion develops hydrogen storage in Vancouver. The company got advisory support through the SR&ED program during the pandemic. Its R&D targets storage materials, where the properties you need don’t exist yet in a known compound.
6. Turkana
Turkana, founded in 2013, used SR&ED to hire developers and push imaging technology into defence, medicine and energy. The credits funded headcount, which is what most software claims actually pay for.
7. Motion Metrics International Corp.
Motion Metrics applies machine learning and computer vision to mining safety from Vancouver. Real-time image processing in a mine is a hard problem: dust, vibration and bad light break algorithms that work fine in a lab.
8. Pattison Sign Group
Pattison Sign Group manufactures signage in Toronto. Its claim covered manufacturing process work and ERP integration. Manufacturers often assume only the lab qualifies. Process development on the floor qualifies too.
9. Autovance Technologies
Autovance builds web-based pricing tools for Alberta auto dealers. The company used the First-Time Claimant Advisory Service to learn what qualified and how to document it. If you’ve never filed, that service is free and worth using.
10. Rio Tinto Fer et Titane
RTFT has been operating for 70 years and used pre-claim consultation on titanium concentrate decoupling. Age doesn’t disqualify you. Long-established companies run some of the largest claims in the country.
What qualifies in your industry?
Software and technology
Software made up 21% of R&D claims in 2022, the largest single share.
What qualifies: developer, QA, designer and technical lead salaries; cloud infrastructure used for development and testing; proprietary algorithms; novel API integrations where the integration behaviour is genuinely unknown.
What gets cut: bug fixes, UI updates, post-launch maintenance, and any work where you knew the answer before you started. Untracked iterations also get cut, because you can’t show the systematic part.
Manufacturing
What qualifies: engineer wages on new tooling and machinery, prototype materials, automation built to solve a throughput problem, custom fixture design.
What gets cut: commercial production using known methods, standard quality checks, and aesthetic changes. Running your existing line is not R&D, however difficult it is.
Architecture
What qualifies: architect and drafter time on structural innovation, energy performance simulation, custom facade systems, adaptive reuse where the building’s behaviour is unknown.
What gets cut: LEED certification on its own. Certification is a standard to meet, not an uncertainty to resolve. Firms also lose subcontractor contributions by failing to document them.
Engineering
What qualifies: optimizing mechanical and building systems, HVAC and materials testing, custom parts prototyped through FEA or CFD simulation, code compliance research where the code has no established answer.
What gets cut: routine CAD drafting. Simulation work also gets cut when nobody logged the outputs, which is the most common avoidable loss in this sector.
Food and agriculture
What qualifies: agronomist, food scientist and lab technician wages; crop yield and resistance trials; organic pesticide research; alternative protein formulation; packaging tested for performance.
What gets cut: reformulations driven by marketing, and packaging design with no performance testing behind it. Failed formulations qualify, but only if you kept the records.
How do you find eligible work in your own company?
Ask three questions about any project from the last 18 months.
Did the team hit a problem where nobody knew whether the approach would work? Did they try more than one approach before something held? Is there a record of it, in commits, tickets, test results or lab notes?
Three yes answers means you likely have an eligible project. Two out of three usually means the work qualified and the documentation didn’t.
What does this actually pay?
A Canadian-Controlled Private Corporation gets a 35% refundable federal credit on the first $3 million of qualified expenditures, then 15% non-refundable above that. Other corporations get 15% non-refundable on everything. Provincial credits stack on top, and Quebec’s is 30% refundable on the first $3 million.
On $500,000 of eligible labour, a Quebec CCPC is looking at roughly $175,000 federal plus the provincial credit. That’s not a rounding error on a startup’s burn rate.
FAQ
What is an example of an R&D tax credit claim?
A software company building a feature with an uncertain technical outcome claims developer wages, testing costs and cloud infrastructure used during that development. If the team tried three architectures before one met the latency target, all three attempts are claimable.
What expenses qualify for SR&ED?
Wages for people doing or directly supervising the eligible work, materials consumed or transformed during research, and contract payments to third parties performing SR&ED on your behalf. Overhead can be claimed through the prescribed proxy amount.
What documentation do I need?
Records created while the work happened: commit history, pull requests, ticket entries, test results, design iterations, lab notes, payroll data and supply invoices. The CRA weighs contemporaneous evidence far more heavily than a narrative written at filing time.
How much is the SR&ED credit worth?
35% refundable on the first $3 million of qualified expenditures for CCPCs, 15% non-refundable beyond that and for non-CCPCs. Provincial credits add anywhere from 8% to 30% depending on where you operate.
Is SR&ED worth claiming for a small company?
Yes, and the refundable portion matters most to small companies. A CCPC receives the 35% federal credit as cash even with no tax payable, which makes it one of the few programs that pays a pre-revenue company.
Not sure what your team’s work is worth? Run the numbers with our SR&ED calculator, or talk to our team about what Chrono R&D finds in your repository.