When and How to File an SR&ED Tax Credit Application

When Can You File an R&D - SR&ED Tax Credit Application?

An R&D - SR&ED tax credit application can be submitted after the close of your company's fiscal year, once eligible research and development (R&D) expenses have been incurred. Qualifying expenditures may include, but are not limited to:

• Employee salaries and wages related to R&D activities.
• Materials consumed or transformed during experimentation.
• Subcontractor and third-party research costs.

The SR&ED application must be filed together with your federal and applicable provincial income tax returns.For incorporated businesses, the fiscal year-end is determined by the date of incorporation. For registered (unincorporated) businesses, the fiscal year-end is December 31.

What Are the Filing Deadlines for R&D - SR&ED Tax Credits?

SR&ED filing deadlines vary based on your business structure:

• Incorporated businesses have up to 18 months after the end of their fiscal year to file an SR&ED tax credit claim.
• Registered (unincorporated) businesses must file within 18 months minus 15 days after December 31, which corresponds to June 15 of the following year.

Although SR&ED claims may be submitted after the original income tax return has been filed, it is strongly recommended to include the SR&ED application with the original return whenever possible. Filing concurrently generally results in faster processing times.

If the SR&ED claim is prepared after the tax return has already been submitted, the original federal and provincial returns must be amended to include the required SR&ED forms and expenditure schedules. These amended returns are then resubmitted to the Canada Revenue Agency (CRA) and Revenu Québec. While amended filings may slightly extend processing timelines, they do not affect the value of the tax credits for which your business qualifies.

Required Documentation for an R&D - SR&ED Tax Credit Application

A complete SR&ED tax credit application requires a comprehensive scientific and technical report demonstrating that the R&D activities meet SR&ED eligibility criteria. This report must clearly describe:

• The technological uncertainties encountered.
• The experimental work performed to address those uncertainties.
• The technological advancements sought or achieved.

This documentation is submitted to the Canada Revenue Agency (CRA) as part of the federal SR&ED program.

Because federal and provincial SR&ED programs apply different eligibility rules and expenditure treatments, separate financial expenditure reports must be prepared for:

• The CRA (federal SR&ED tax credits)
• Revenu Québec (provincial R&D tax credits)

How Is an R&D - SR&ED Tax Credit Application Reviewed?

The CRA conducts the initial review of all SR&ED tax credit applications. During this process:

• A scientific research and technology advisor (SR&ED reviewer) evaluates the technical aspects of the claim to confirm eligibility.
• A financial reviewer may assess the accuracy and eligibility of the claimed R&D expenditures.

Once the CRA completes its assessment, the results are shared with Revenu Québec, which performs its own financial review for provincial R&D tax credit purposes. Throughout the review process, either the CRA or Revenu Québec may request additional documentation or clarification to finalize their evaluation.