Part 1 · SR&ED basics
What you can claim
Salaries are usually the biggest part. Contractors, materials, overhead and, since the 2026 changes, equipment can count too.
Last reviewed Sep 20263 min read
Costs that can count
| Cost | What counts |
|---|---|
| Salaries and wages | The share of pay for time spent directly on SR&ED work, including supervising and supporting it. |
| Contractors | 80% of what you pay arm's length contractors for SR&ED done in Canada. |
| Materials | Materials used up or changed by the work. |
| Overhead | Usually through the proxy method: an extra 55% of eligible salaries, with no receipts needed. |
| Equipment | Eligible again for property bought on or after December 16, 2024. |
People and their time
Only the time someone actually spent on SR&ED counts. A developer who spent 40% of the year on experiments claims 40% of their salary, not all of it.
- Specified employees (people who own 10% or more of the company, or are related to someone who does) have extra CRA limits.
- Bonuses and taxable benefits have their own rules. Ask your preparer.
- Contractors are claimed differently from employees, so pick the right type when you add someone.
What lowers a claim
- Government help for the same work, like IRAP or other grants.
- Work done outside Canada (with narrow exceptions).
- Being associated with other companies: the group shares one $6M limit for the 35% rate.
Tell us about funding
Settings, SR&ED profile has a question about government funding. Answer it, so estimates are not too high.
Sources
This guide helps you prepare. It is not tax advice. Have your SR&ED preparer review your claim before you file.