Since the pandemic, the Government of Canada has been rebuilding the domestic biomanufacturing sector, investing $1.2 billion in its vaccine, therapeutics and biomanufacturing capacity. It has also provided $126million to the National Research Council of Canada for the Montréal-based biologics Manufacturing Centre, and in 2021, it committed $2.2billion to its long-term Biomanufacturing and Life Sciences Strategy.
Amid this drive to improve the health of the Canadian life sciences sector, many small to medium enterprises are taking advantage of a generous tax credit that supports and encourages innovation. SR&ED is a federal program that provides corporations, firms and individuals with $3billion-$4billion each year.
Find out whether your biotech research activities are eligible for the SR&ED tax credit
Work that involves a systematic investigation that aims to resolve a scientific or technological uncertainty or to advance scientific knowledge could be eligible for CRA’s SR&ED tax credit.
Use our bioscience SR&ED checking tool to see if your project is eligible.
Here are some examples of projects that could benefit from the SR&ED program:
Pharmaceuticals
- Engineering protein variants for stability or binding affinity
- Optimizing a drug formulation solving stability issues under physiological conditions
Clinical research (where there is uncertainty)
- Studying the safety of a new compound in a specific population
- Developing evidence for a new clinical procedure
Vaccine research
- Scaling up vaccine production
- Development of a new adjuvant
Bioprocess innovation
- Engineering a new cell culture process to increase yield
Development of algorithms for analyzing biological datasets, and research software builds could also be eligible for the SR&ED credit.
Significantly, the research work does not have to be successful to be eligible. So even if the project could not be scaled, or if there was no commercial use for the innovation, you can still make an SR&ED claim.
What types of bioscience organizations can apply for the SR&ED tax credit?
Individuals and corporations can successfully apply for the SR&ED tax credit. CRA publishes annual stats for the SR&ED programme showing that many small to medium enterprises successfully make a claim for this benefit – roughly 64% of claims come from bodies with a gross income of less then $4million. And 13% of applicants are in the medical sciences sector. The program can also benefit companies carrying out research into healthcare and medical devices.
SR&ED is for start-ups as well as for established biotech companies, and the reduced tax liability is ideal for companies ambitious to accelerate growth.
How to take advantage of the SR&ED tax credit
Companies that apply for the SR&ED tax credit can get a tax refund representing up to 35% of their eligible research expenses. Bioscience companies that take advantage of this program can reduce their tax liability, freeing up capital to spend on further development work so they can get their innovation on the market sooner.
Filing for the SR&ED tax credit
Most companies make their SR&ED claim when they file their tax return T661. There is a strict deadline for filing for this tax credit. As SR&ED specialists, we can assist you in preparing your claim. We can provide an SR&ED eligibility assessment service, ensuring that your project is suitable for the program and sufficiently documented. And using our claim review service should help you to meet the CRA’s deadlines.
Calculating your SR&ED expenses
When you calculate the SR&ED expenses for your life science research work, you should include all expenses arising from the project. This might include materials, payments to staff and technical personnel, purchase of special equipment and even overhead costs. If you are unsure whether an expense is eligible for your SR&ED claim, it’s best to speak with a tax accountant.
Book a call with Canadian SR&ED to get clarity about your R&D expenses claim.
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