What qualifies for SR&ED?

Work done in Canada that meets two requirements in the CRA's guidelines. The "why": it aimed at a scientific or technological advancement because available knowledge could not resolve an uncertainty. The "how": it was a systematic investigation by experiment or analysis, with hypotheses, testing and conclusions. Support work such as programming, testing or data collection can qualify when it directly supports that investigation.

Are the CRA's five SR&ED questions still used?

The five questions came from the CRA's 2015 Eligibility of Work policy, which the CRA archived when it published its Guidelines on the eligibility of work for SR&ED tax incentives in August 2021. The current guidelines frame the test as the "why" and "how" requirements. The legal definition in subsection 248(1) of the Income Tax Act did not change, and many practitioners still use the five questions as a checklist.

Does a failed project qualify for SR&ED?

It can. The CRA's guidelines say success or failure in meeting your objectives is not relevant to the "why" requirement. Learning that an approach does not work is new knowledge, as long as the work was a systematic investigation of a real technological uncertainty and you kept evidence of what you tried and concluded.

What work is excluded from SR&ED?

The Income Tax Act excludes market research and sales promotion, quality control and routine testing, social sciences and humanities research, prospecting and producing minerals, petroleum or natural gas, commercial production, style changes and routine data collection. Training and buying or hiring existing knowledge also do not count, because they use knowledge that already exists.

Is software development eligible for SR&ED?

Some of it. Software work qualifies when the team faced a technological uncertainty that standard practice, documentation and available tools could not resolve, and worked through it by testing hypotheses. Building features with known frameworks, routine integration and ordinary debugging usually do not qualify, even when they are difficult. See our guide to SR&ED for software development.

SR&ED eligibility check: does your project qualify?

A project qualifies for SR&ED when work done in Canada meets the CRA's two requirements: the "why" (you aimed to resolve a scientific or technological uncertainty that available knowledge could not) and the "how" (a systematic investigation by experiment or analysis). Answer 5 questions to test one project against both.

About one project

Answer for a single project or problem, not your whole product. Your answers stay in your browser.

1. Was the work done in Canada?

Yes Partly No

2. Did you face a technical problem that standard practice or published knowledge couldn't solve?Your team's know-how, documentation, papers, vendors and forums did not have the answer, so it was unknown whether, or how, you could get the result.

Yes Not sure No

3. Did you work through it systematically: form ideas, test them, and draw conclusions?For example, prototypes, benchmarks, simulations or trials, including ideas that failed.

Yes Partly No

4. Was the work mostly routine testing, market research, cosmetic or style changes, or other excluded work?

Yes, mostly Some of it No

5. Did you keep records while the work was happening?Commits, tickets, test results, notes, timesheets.

Yes Some No

How does the CRA decide if work is SR&ED?

The CRA applies the definition of SR&ED in subsection 248(1) of the Income Tax Act, explained in its Guidelines on the eligibility of work for SR&ED tax incentives. Work done in Canada must meet two requirements, which the CRA calls the "why" and the "how".

The "why": a scientific or technological uncertainty

The work must aim at a scientific or technological advancement: new knowledge that moves understanding forward. That aim exists when it is unknown or uncertain whether a result can be achieved, or how, because the knowledge available to you is not enough. Available knowledge includes your own team's experience and sources reasonably available to the public. If you could reach the goal by applying that knowledge, there is no uncertainty, however hard the work was. The CRA says success or failure is not relevant: a failed attempt can still be an advancement.

The "how": a systematic investigation

The work must be a systematic investigation or search in a field of science or technology, carried out by experiment or analysis. The CRA describes it as generating an idea or hypothesis consistent with known facts, testing it, drawing logical conclusions from the results, and keeping evidence as the work progresses. The people doing it need relevant technical knowledge to design the tests and interpret the results, whatever their formal credentials. Following an orderly process for routine work is not enough.

Support work and excluded work

Engineering, design, programming, data collection and testing can qualify as support work when they directly support the investigation and are in proportion to its needs. The Act excludes market research and sales promotion, quality control and routine testing, social sciences and humanities research, mineral and petroleum prospecting and production, commercial production, style changes and routine data collection. Training and buying existing know-how also don't count.

Not sure where the eligible work starts and stops?

We map your projects to the CRA's test using your commits, tickets and test results, and an experienced SR&ED reviewer checks the result.

What about the "five questions"?

Older guides list five questions from the CRA's 2015 Eligibility of Work policy. The CRA archived that policy when it published the current guidelines in August 2021. The law did not change, so the questions still work as a checklist, but this tool follows the current "why" and "how" framing.

What to do next

If your result is "likely" or "possibly" eligible, gather the records listed in your summary. The CRA says dated documents specific to the work are best, and its Get ready to claim page lists examples. Then follow our step-by-step guide to filing an SR&ED claim. Software teams should read SR&ED for software development. For work you have not started yet, check whether you can ask the CRA to confirm eligibility in advance with our pre-claim approval eligibility checker.

SR&ED eligibility check: does your project qualify?

How does the CRA decide if work is SR&ED?

The "why": a scientific or technological uncertainty

The "how": a systematic investigation

Support work and excluded work

Not sure where the eligible work starts and stops?

What about the "five questions"?

What to do next

Frequently asked questions

Want a second opinion on what qualifies?