SR&ED Tax Credit Refund Rates & Eligible Expenditures
What Influences SR&ED (R&D) Tax Credit Refund Rates?
SR&ED tax credit refund rates in Québec are influenced primarily by the legal status and structure of your business. Corporations generally benefit from significantly higher reimbursement rates than unincorporated businesses. In many cases, incorporating can nearly double the refundable portion of eligible R&D expenditures.
Beyond incorporation status, several additional factors affect the SR&ED refund rate and how the credits are received (refundable cash refunds versus non-refundable tax credits), including:
- Taxable income level.
- Value of corporate assets.
- Business size and ownership structure.
- Type of eligible R&D activities and expenditures.
For businesses with substantial investments in research and development, optimizing these factors can materially increase the value of SR&ED tax credits. Strategic planning, particularly around incorporation and financial structure can help maximize refundable amounts.
Our SR&ED tax credit consultants can assess your specific situation and provide tailored guidance to ensure you receive the highest possible refund rate under Québec and federal SR&ED programs.
Eligible Expenditures versus R&D - SR&ED tax credit rates
The table below outlines the main expenditures eligible for SR&ED tax credits as well as the corresponding reimbursement rates.
| Eligible Expenditures | Below 50,000$ (total) | Above 50,000$ (total) |
|---|---|---|
| Salaries for SR&ED | 54% | 74% |
| Materials | 35% | 35% |
| Outsourcing - SR&ED activities | 28% | 38% |
| Outsourcing - Support activities | 0% | 10% |
| Support salaries | 0% | 20% |