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SR&ED tax credits for businesses

​At NoviaFond, we support SMEs across Quebec and Canada with their SR&ED and CRIC tax credit claims. Our work begins well before a claim is prepared: we first assess the eligibility of the work performed, the technical substance of the projects, and the available documentation to determine whether the claim genuinely merits being submitted.

Do your works go beyond simple technical improvements?

Your team may have tried to solve a technological difficulty, tested different approaches or developed a solution when no obvious method could achieve the desired result.

This work could fall under the category of scientific research and experimental development.

The RS&E concerns the work carried out.

Unlike a grant, SR&ED is a tax program that relates to research and development work carried out during a tax year.

The analysis is not based solely on the sector of activity or the innovative nature of a product. It focuses on the nature of the difficulties encountered, the approach taken, and the elements that support the work and expenses claimed.

Federal RS&DE and Quebec CRIC: Two components, one approach

In Quebec, your work may qualify for two separate credits: the federal SR&ED credit, administered by the Canada Revenue Agency, and the Quebec CRIC (Research, Innovation and Commercialization Credit), administered by Revenu Québec.

The CRIC comprises two components: research and development, and pre-commercialization. We coordinate the analysis and preparation of federal and Quebec applications to avoid inconsistencies between files and ensure you claim what your company is entitled to.

These two loans are based on distinct rules, rates and criteria and should never be confused.

YOUR COMPANY MAY BE AFFECTED IF…

  • Your team has encountered a technological difficulty with no obvious solution.

  • Several approaches were tested.

  • Some trials failed or produced unexpected results.

  • employees or subcontractors participated in the work

  • You have kept notes, versions, reports, technical notes or test results

WHICH IS NOT ENOUGH

Developing a new product, writing code, investing heavily, or using innovative technology is not automatically sufficient to establish eligibility for SR&ED.

WHAT WE ARE ANALYZING

  • the nature of scientific or technological uncertainties

  • the knowledge available at the start of the work

  • the hypotheses and the tests carried out

  • The results, the failures, and the lessons learned

  • contemporary documentation available

  • the people who participated in the work

  • expenses that may be associated with eligible activities

  • the applicable deadlines for the application

OVER $500,000 INVESTED. BUT HOW MUCH ACTUALLY QUALIFIES FOR SR&ED?

An SME develops a digital solution with a small internal team and external resources.

It has invoices, contracts, thousands of lines of code, and a significant investment. Yet, none of these elements alone is sufficient to demonstrate eligibility for SR&ED.

The real question lies elsewhere: what technological obstacles did the team encounter when no obvious solution could achieve the desired result?

Our work consists of reconstructing this technical history: the hypotheses formulated, the approaches tested, the failures, the adjustments, and the lessons learned. We then distinguish between ongoing development and experimental work, and examine separately the contributions of the internal team and external resources.

Following the diagnosis, management receives a clear answer: whether or not to continue the process, what work can be further developed, and what documentation needs to be consolidated before submission.

Because in SR&ED, it's not the amount invested that makes the case strong. It's the ability to demonstrate what has actually been attempted, learned, and documented.

This example is representative of situations encountered and does not correspond to a particular client.

The documentation begins during the work, not at the time of the claim.

Evidence supporting an SR&ED claim may include versions, tests, results, technical decisions, and time spent on the work.

Documenting as you go along, rather than reconstructing everything afterwards, significantly strengthens a case.

OUR SUPPORT

Go/No-Go Diagnosis We assess the nature of the work, the documentation and the potential of the case.

Technical analysis: We work with people who truly understand the projects and the challenges encountered.

Structuring the file: We organize the technical and financial elements necessary for the application.

Submission and follow-up We support the company in preparing its application and remain available in case of questions or review.

A RIGOROUS APPROACH BEFORE FILING

We do not automatically accept all applications.

If the work does not meet the requirements of SR&ED or if the documentation is insufficient, we will explain this to you before undertaking a full process.

This selection process protects your business and allows us to focus our efforts on projects that we believe are defensible.

HAVE YOU INVESTED IN DEVELOPMENT WORK IN THE PAST FEW MONTHS?

An initial diagnosis helps to assess the nature of the work, the available documentation and the relevance of going further.

FAQ — SR&ED TAX CREDITS

Question 1
Can we make a claim for work that has already been done?


Yes. Unlike a grant, SR&ED works like a tax credit: the claim relates to work already carried out during a tax year and must be submitted within a specified timeframe after the end of that year (usually around 18 months). After this deadline, the claim is no longer admissible.

 

Question 2
What is the difference between SR&ED and CRIC?


The SR&ED is a federal tax credit, administered by the Canada Revenue Agency, for scientific research and experimental development. The CRIC is a Quebec tax credit, administered by Revenu Québec, that covers both R&D and pre-commercialization. The two can often be claimed simultaneously, but they are based on distinct criteria, hence the importance of a coordinated analysis of both applications.

 

Question 3
Can the salaries of executives be taken into account?


Yes, under certain circumstances. At the federal level, the salaries of individuals directly involved in R&D can be included, including those of shareholder executives, subject to specific rules depending on their status within the company. In Quebec, this type of expenditure now falls under the jurisdiction of the CRIC (Quebec Research and Innovation Centre). We are coordinating the analysis of both aspects to ensure that nothing is overlooked or duplicated.

 

Question 4
Can subcontractors be included?


In some cases, yes. Expenses related to SR&ED work performed by a subcontractor may be eligible, depending on the nature of the contract and the relationship between the parties. This point warrants a case-by-case analysis.

 

Question 5
Can a software project be eligible?


Yes, if it involves resolving a genuine technological uncertainty—that is, a solution that could not be achieved with existing methods or knowledge. Simply using a new technology or writing a lot of code is not enough to demonstrate this.

 

Question 6
What happens if the documentation is incomplete?


Incomplete documentation does not automatically render an application inadmissible, but it complicates the demonstration of the work and increases the risk that part of the application will be reduced or rejected during review. Guidance can often help identify what can still be added.

 

Question 7
Can an application be reviewed by the CRA?


Yes. The Canada Revenue Agency, and in some cases Revenu Québec, can review an application on a technical or financial basis. It's not unusual for a well-structured application from the outset to reduce the risks during such a review.


These answers are provided for general information purposes; actual eligibility depends on the specific facts of each case.

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