SRED CRA or CRA SR&ED (SR and ED) is Canada’s tax incentive program to encourage Canadian technology companies to increase their spending on R&D activities.  The program is administered by the CRA and it awards approximately $3 billion federally to 20,000 Canadian technology firms.

SR&ED is short for the Scientific Research and Experimental Development Program.  The program is also often abbreviated SRED. 

Each province in Canada contributes additional credits to companies for SRED work carried out within a particular province.  The provincial SRED piggyback programs were harmonized with the federal program back in 2010 for all provinces except Quebec.  Harmonization means that companies only deal with the CRA to receive all the federal and provincial credits they are entitled to.  The CRA SRED program administers approximately $1B of these provincial credits annually.

Government R&D tax credits are available to qualifying Canadian corporations doing innovative work or solving technical challenges in their day to day work.  It is administered by a standalone group within CRA.  SRED is the biggest R&D credit program in the government and about 5 times the size of RESP credits disbursed. 

Start-ups who have incorporated in Canada and who have staff on a regular payroll are a particularly well-served group under this program. Your qualifying expenses (payroll, prototype materials and qualifying subcontractors) attract credits at well over double the rates paid to large corporations.  Also, all credits are paid to you in cash.  You don’t need to show profits to qualify for SR&ED.