Costs & Financials

10 SR&ED Facts That Will Make You File Tomorrow

Canadian tech companies leave an estimated $400 million in unclaimed SR&ED credits on the table every year. The average approved claim reportedly returns approximately $155,000. If you're not filing, you're essentially lighting money on fire.

Marcus Webb · Editorial Lead 2026-05-29 5 min read

Fact 1: The average approved claim is $155,000

Industry analyses suggest the average approved SR&ED claim returns approximately $155,000, though CRA does not publish exact averages in its public statistical reports. For a pre-revenue startup with a $500K runway, that's 31% of your entire funding round — back in your bank account. Not equity. Not debt. Actual cash you can use to pay salaries, extend runway, or hire that engineer you've been putting off.

The median is smaller — around $45,000 — because a few aerospace and pharma giants skew the average with massive claims. But for tech companies, the typical software claim lands between $50K and $250K. That's not pocket change. That's a quarter of a million dollars for work you already did.

Fact 2: You can claim from your very first month

There's no minimum company age. No revenue requirement. No employee count threshold. A sole proprietor who started coding in January can file for January through December. A 2-person startup that incorporated three weeks ago can file for those three weeks.

The only thing you need: some record of what you did. Slack threads. Commit messages. Design sketches in Figma. A Google Doc with rough notes. It doesn't need to be formal. It just needs to exist.

The myth that kills more claims than anything else: 'We'll file when we're bigger.' Here's what actually happens. You wait 12 months. You lose 12 months of eligibility. Then you try to reconstruct what you did 9 months ago and your documentation is garbage. Start now. Document as you go. Future you will thank present you.

Fact 3: You get 35% back — even if you paid zero tax

For Canadian-controlled private corporations with under $10 million in prior-year capital, the federal rate is 35% of qualifying R&D spending. And here's the kicker: it's refundable. Meaning you get a cheque even if your company has never paid a dollar in tax.

Stack provincial credits on top: Ontario adds 8%. Nova Scotia adds 15%. British Columbia adds 10%. Quebec adds up to 30%. A Toronto startup can receive up to 43% back. A Montreal startup can hit 65%. That's not a typo.

What this means in real money

Four-person startup in Toronto. Annual payroll $520K. Two engineers spend 60% of their time on R&D, one spends 30%, the founder spends 20%. Qualifying wages: $234K. Federal refund at 35%: $81,900. Ontario OITC at 8%: $18,700. Total: $100,600. That's nearly 20% of your annual wage bill — cash that extends your runway by two to three months without touching your investor's capital.

Fact 4: You have 18 months, but waiting costs you

The deadline is generous: 18 months after your fiscal year-end. Ended December 31, 2025? You have until June 30, 2027. Sounds great. Except the refund takes 3–6 months to process after you file. So if you wait until the deadline, you're waiting an extra half year for money you could have had already.

The 2024 federal budget also quietly expanded cloud computing eligibility. AWS, Azure, GCP infrastructure used for R&D now counts more cleanly — no more complex allocation gymnastics. Another reason to file sooner rather than later.

Fact 5: The biggest claim ever was $2.4 billion

In 2013, Bombardier filed what is widely reported as the largest SR&ED claim in Canadian history — approximately $2.4 billion across multiple subsidiaries and fiscal years. It covered the CSeries aircraft, now the Airbus A220. Aerodynamic modeling, composite wings, fly-by-wire avionics. The claim portfolio was approved after extensive review.

The point isn't that you should aim for billions. The point is that the program has no ceiling. A $50K claim from a startup gets the same proportional treatment as a $50M claim from an aerospace giant. CRA doesn't care about size. They care about documentation.

Fact 6: You don't need a consultant

The SR&ED consulting industry has done a masterful job convincing founders that filing requires a professional who charges 15–30% of your refund. It's nonsense. The T661 is a standard CRA form. The technical narrative is just your engineering notes, reframed.

Software-guided platforms like sredy walk you through the whole thing: finding qualifying work, writing the narrative, calculating spend, generating CRA-ready forms. Fixed fee: $299–$699. Compare that to $15K–50K for a traditional consultant on a $100K claim.

The real question isn't whether you need help. It's whether your documentation is strong enough that the claim practically writes itself. Companies with good habits file in a weekend. Companies with poor habits spend months reconstructing records — and overpay consultants to do what they could have done themselves.

Fact 7: CRA reviews fewer than 1 in 10 claims

Based on publicly available information and industry reporting, roughly 7–10% of claims may be selected for review. The majority are processed and refunded without additional questions. Your odds are good if your documentation is thorough.

Claims that get flagged tend to have warning signs: unusually large amounts relative to company size, vague technical descriptions, or first-time filers in industries with historically high error rates. Well-documented tech claims from established companies face review rates closer to 5%.

Fact 8: Your failures count

This is the single most misunderstood thing about SR&ED. The program rewards systematic investigation — not successful outcomes. If you tried three approaches and all three failed, that investigation still qualifies. In fact, failures often demonstrate systematic investigation better than successes, because they show a clear learning process.

A 2019 Federal Court decision, Western Oil Sands Inc. v. The Queen, explicitly said unsuccessful R&D qualifies as long as the systematic investigation criteria were met. The court ruled that technological advancement doesn't require a commercial win. It requires genuine experimentation.

Fact 9: Contractors and co-op students are eligible

Qualifying spend isn't limited to full-time employees. Contract developers, co-op students, post-docs, and certain overseas contractors can all be included. The work just needs to be on qualifying R&D and properly documented.

For early-stage startups, this matters. Many rely heavily on contractors and co-ops. A $100K contractor spend on core R&D can add $35K–43K to your federal refund. That's real money.

Fact 10: File every year. The credits compound.

SR&ED is annual. Every fiscal year, you file for that year's R&D. A company that files consistently for five years builds a documentation habit that makes each subsequent claim easier. And builds a track record with CRA that reduces review risk.

The math: a 5-person startup filing $80K annually for five years receives roughly $350K in total refundable credits. Non-dilutive capital that extends runway, funds hiring, and keeps you out of bridge rounds.

All figures are estimates based on publicly available CRA data and typical Canadian tech company profiles. Actual values depend on your specific circumstances, provincial programs, documentation quality, and CRA review. Consult a qualified Canadian CPA. Learn more at sredy.io.

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