SR&ED eligibility
Understand the current CRA requirements and where routine engineering falls outside the program.
A commercially innovative product can come from routine technical work. A failed internal project can still produce a technological advancement. SR&ED eligibility turns on the work itself, not the business outcome.
The CRA currently states two requirements. This guide shows how uncertainty, hypotheses, experiments and conclusions fit inside them without reducing the analysis to a slogan.
On this page
Begin with the two requirements
The CRA currently states two requirements: the work must be conducted in Canada for scientific or technological advancement, and it must be a systematic investigation or search carried out in science or technology by experiment or analysis.
- Advancement: the work was conducted to generate or discover scientific or technological knowledge. A commercial improvement on its own is not enough.
- Uncertainty: the knowledge base available at the start was insufficient to determine whether or how the result could be achieved. That is why new knowledge was needed.
- Systematic investigation: the work defined a problem, advanced a hypothesis, tested it by experiment or analysis, and developed logical conclusions from the results.
Read the project as a reviewer would
Explain why the available knowledge could not resolve the problem, which hypotheses the team tested, what the work showed and what knowledge it sought or gained. Those points map closely to lines 242, 244 and 246 of Form T661. Clear writing helps a reviewer understand the facts; it cannot change the eligibility of the work.
Valuable work can still sit outside SR&ED
The CRA excludes several kinds of work from the definition of SR&ED. It also excludes activities whose purpose is to acquire knowledge or know-how that already exists.
- Market research or sales promotion.
- Quality control and routine testing of materials or products.
- Research in the social sciences or humanities.
- Commercial production or use of a new or improved material, device, product or process.
- Style changes and routine data collection.
- Training, on-the-job learning, hiring experts to apply what they already know, and purchasing proprietary knowledge.
The industry does not decide the answer
Software, manufacturing and food-science work can qualify when the facts meet both CRA requirements. The industry label does not decide eligibility; the purpose of the work, the knowledge gap and the way the investigation was carried out do.
A failed hypothesis can still add knowledge
A failed hypothesis can still generate technological or scientific knowledge. The CRA notes that learning why a possible solution will not work may constitute an advancement. The rest of the eligibility requirements still have to be met.
Sources and review
Checked against current primary sources
SREDlog Editorial Team completed an editorial source review on August 22, 2026. This records a primary-source check, not independent tax-professional advice.
- CRA: What work is eligiblechecked 2026-08-22
- Justice Laws: Income Tax Act, section 37checked 2026-08-22
Frequently asked questions
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This guide was checked against the linked CRA and enacted federal sources on August 22, 2026. It is general information, not tax advice, and has not been reviewed by an independent qualified tax professional. SR&ED rules, rates and limits change, so confirm the rules for the claimant's tax year before filing. See our editorial policy.