Frequently asked questions

For Canadian-controlled private corporations (CCPCs), combined federal and provincial rates are approximately: 64% of eligible wages, 33% of eligible contractors, 40% of eligible materials, and 55% of eligible overheads. These are combined rates — the federal enhanced ITC rate is 35% on the first $6M of expenditures, with most provinces adding additional credits on top. Rates vary by company tax situation, structure, and province.

The 2025 Federal Budget introduced historic enhancements: the expenditure limit doubled from $3M to $6M, maximum refundable credits rose to $2.1M, capital expenditures were restored as eligible costs, public corporations gained access to the enhanced 35% rate, and phase-out thresholds widened to $15–75M, and a new election lets companies with under $75M in revenue base their expenditure limit on average gross revenue instead of taxable capital. An optional pre-claim approval process was also introduced in April 2026. These changes add an estimated $1.9B in support over six years.

The average ITC per applicant is approximately $207,000 across all business sizes. However, this varies dramatically — small businesses typically receive smaller refunds, while large enterprises can claim millions. The total program distributed $4.5 billion in fiscal year 2024–2025 across roughly 22,700 claims.

Claims are filed using CRA Tax Form T661, supplemented by Schedule 31 and provincial SR&ED schedules as needed. The filing deadline is 18 months after your fiscal year-end. Most companies work with an SR&ED consultant who prepares the technical narratives, financial summaries, and CRA forms on their behalf.

We do the heavy lifting: reviewing your R&D projects to identify eligible activities, writing defensible technical narratives, calculating eligible expenditures, preparing T661 forms and supporting schedules, filing with CRA, and providing full audit representation if your claim is selected for review. We also help build documentation processes so future claims are even stronger.

Effort depends on project scope, but we've designed our process to minimize disruption. Typically, we need 2–4 hours of interviews with your technical team per project, access to existing documentation (timesheets, tickets, design docs), and a financial review with your accounting team. We handle everything else — the narratives, calculations, forms, and filing.

Standard processing takes 2–5 weeks after filing, with refund mailing in 3–5 weeks if applicable. CRA Direct Deposit significantly accelerates timelines. If selected for audit, processing can extend to 6–9 months.

In most cases, we don't recommend it. Pre-claim approval (introduced in April 2026) requires you to apply before the work begins, and a determination can take up to eight weeks. That shifts the burden from documenting what you did to justifying in advance what you plan to do, which is unrealistic for teams that iterate quickly. Genuine experimental development almost always drifts from its original scope and timeline, and a project that deviates from its pre-approved scope risks having the approval invalidated. The reward is marginal: it shortens the expenditure review target from 180 days to 90, but you still have to wait until your fiscal year ends to file and receive any refund, and the large majority of claims are never selected for review and are processed within about 60 days anyway.

Approximately 20% of claims face audits — that's roughly 1 in 5. Frequency depends on tax risk factors, claim size, year-over-year increases, and random CRA selection. Claims that have increased significantly in size are more likely to be audited. This is why having a consultant who can defend your claim is critical, not optional.

CRA assigns both a financial reviewer and a research & technology advisor (RTA) to your claim. The RTA will review your technical narratives and may request interviews with your R&D team. The financial reviewer examines expenditure calculations. The process typically takes 3–6 months. Having a consultant present during the audit significantly improves outcomes.

Yes — approximately 4% of claims are denied entirely, and another 6% are accepted with modifications (reductions). The most common reasons for denial are: insufficient documentation, failure to demonstrate technological uncertainty, work that doesn't meet the three-part eligibility test, and missed filing deadlines. Proper preparation and documentation are the best defense.

No. SR&ED only applies to work done in Canada. Contractors must be Canadian companies and/or individuals. There is a provision allowing up to 10% of employee time allocation for out-of-country work, but the SR&ED activity must primarily occur within Canada.

Absolutely. Startups often have the most to gain — if you're a CCPC with no taxable income, your credits are fully refundable, meaning you get cash back. Many early-stage companies use SR&ED refunds to fund ongoing development. There's no minimum company size or revenue requirement.

You need documentation showing a nexus of the activity, the performer, and time spent — correlated to the claimed SR&ED work. Typical documentation includes emails, timesheets, design specifications, work logs, tickets, meeting notes, and test results. The key is that records are contemporaneous (created as work happens) rather than reconstructed after the fact.

Yes. SR&ED has never rewarded typing code. Under subsection 248(1) of the Income Tax Act, computer programming is only eligible when it is directly in support of a systematic investigation aimed at technological advancement. Work where your team formulates hypotheses, designs experiments, and evaluates results still qualifies when an agent writes the syntax. Delegating routine implementation to agents can actually raise the share of your team's time that is eligible.

Time spent directing an agent can be eligible when the direction is part of an experimental effort: defining the technical problem, specifying the approach, rejecting the agent's bad recommendations, and evaluating outcomes against your hypotheses. Time spent prompting for routine features, boilerplate, or configuration is not eligible, just as writing that code by hand would not be.

Not on their own. A long, unstructured chat transcript mixes eligible design decisions with routine implementation, and the CRA will not accept it as a record of a systematic investigation. Structured artifacts are far stronger: project charters, design specifications, Architectural Decision Records (ADRs), and notes from sessions where engineers challenged or overruled the agent.

Much less than they used to. When agents generate commits, open pull requests, and close tickets under a developer's account, code output no longer reflects human effort. ENTAX calls this the decoupling problem. Teams should pair intent metrics (records of human decisions) with a low-friction record of human time, such as human-scoped story points, recorded standup updates, sprint retrospectives, or a weekly percentage split by project.

It can, when the work involves technological uncertainty that standard practice could not resolve, such as developing new model architectures, training methods, or data techniques where the outcome was not known in advance. Integrating an existing model or API, or routine prompt and parameter tuning, generally does not qualify on its own. The test is the same three-part test applied to any SR&ED work.

ENTAX is based in Vancouver, British Columbia, with our head office in Burnaby. We serve companies across Canada, and most engagements run remotely, so your location doesn't limit what we can do for you.

Yes. We prepare federal SR&ED claims and the matching provincial R&D credits for companies anywhere in Canada, including Ontario, Quebec, and Alberta. Interviews with your technical team happen by video call or in person, whichever works best.

We offer contingency fees (a percentage of the credits you receive, paid only after CRA pays you), hourly advisory for self-prepared claims, and fixed fees for a defined scope. Because the right fee depends on your company and claim, we quote after a free assessment rather than publishing a single rate.