The SR&ED program is a federal tax incentive program, administered by the Canada Revenue Agency (CRA) that encourages Canadian business of all sizes, and in all sectors to conduct research and development (R&D) in Canada.  It is the largest single source of federal government support for industrial R &D.  In other words, this program provides tax incentives to companies that develop new or improve existing products, new or improved processes, and those who become involved in resolving challenges or obstacles encountered in their development.

Subsection 248 (1) of the Income Tax Act states 3 essential criteria that define, and are accepted by the Canada Revenue Agency, the project eligibility:

1. The existence of Technological Objectives leading to Technological Advancement.
2. The presence of Technological Obstacles in the project.
3. Step by Step systematic and Experimental investigation that must be undertaken on    projects which have technical or scientific content.

Common activities that meet these guidelines (as outlined by the CRA) include but are not limited to the following:

• Developing new products or improving existing products
• Developing new or improved methodologies, techniques or processes
• Manufacturing or altering machinery/equipment
• Prototyping and model creation
• Programming and mathematical analysis
• Testing and data collection
• Recycling or reclaiming waste products
• Conducting operational efficiency studies