How It Works
How we estimate your SR&ED refund
No jargon. Here is exactly how the calculator turns your R&D spend into an estimated refund range.
1. Add up your eligible R&D spend
We start with three things: the salaries and wages you paid for SR&ED work, the cost of Canadian arm's-length contractors, and the materials you used up in the research. Contractor costs count at 80%, so we take 80 cents of every dollar you paid them. Salaries and materials count in full.
2. Add the proxy overhead on salaries
Most companies use the proxy method for overhead. Instead of tracking every small cost, the CRA lets you add 55% of your SR&ED salaries as a flat overhead amount. This is why the estimate shows a range: the low end leaves the proxy out, and the high end adds it in.
3. Apply the federal credit
The federal SR&ED credit is 35% for a Canadian-controlled private corporation (a CCPC), on the first $6,000,000 of eligible spend. For companies that are not CCPCs, the federal rate is 15%. We cap the spend used for the federal credit at $6,000,000.
4. Add your provincial credit
Most provinces add their own SR&ED credit on top of the federal one. The rate depends on where you are. We apply your province's rate to the same pool of eligible spend, then add it to the federal amount to get your total range.
A quick example
Say an Ontario CCPC spent $200,000 on SR&ED salaries, $50,000 on Canadian contractors, and $10,000 on materials. The eligible spend is $250,000 without the proxy and $360,000 with it. The federal credit at 35% is $87,500 to $126,000. The Ontario credit at 8% is $20,000 to $28,800. That gives a total estimated refund of about $107,500 to $154,800.
Provincial SR&ED rates
These are headline 2025 to 2026 rates for a CCPC. Provinces with a 0% rate still benefit from the federal credit. Your actual rate can depend on the program rules in your province.
| Province or territory | Rate | Refundable | Note |
|---|---|---|---|
| British Columbia | 10% | Yes | 10% refundable for CCPCs. |
| Alberta | 20% | Yes | 20% refundable provincial credit. |
| Saskatchewan | 10% | Yes | 10% refundable for CCPCs. |
| Manitoba | 15% | Yes | 15% refundable for in-house R&D. |
| Ontario | 8% | Yes | Ontario Innovation Tax Credit (OITC), 8% refundable for CCPCs. |
| Quebec | 30% | Yes | Up to 30% refundable on eligible salaries. |
| New Brunswick | 15% | Yes | 15% refundable provincial credit. |
| Nova Scotia | 15% | Yes | 15% refundable provincial credit. |
| Prince Edward Island | 0% | N/A | No provincial SR&ED credit. The federal credit still applies. |
| Newfoundland and Labrador | 15% | Yes | 15% refundable provincial credit. |
| Yukon | 20% | No | 20% non-refundable credit. |
| Northwest Territories | 0% | N/A | No provincial SR&ED credit. The federal credit still applies. |
| Nunavut | 0% | N/A | No provincial SR&ED credit. The federal credit still applies. |
Questions
More on the math
Quick answers on the range, the proxy method, and how contractor costs are counted.