Industries across Canada are supported by custom equipment manufacturers, who through constant innovation, research and development, enable improvements in processes and automation that deliver economic growth.
Try our tool to see if your work developing custom equipment is eligible for SR&ED.
Our advisers also have extensive expertise in the healthcare, technology and engineering sectors.
Developing innovations for Canadian industry
Custom equipment development activities are an established category of SR&ED claims reviewed by the CRA.
Here are some examples of custom equipment development activities that could be eligible for the SR&ED program.
Developing a conveyor to handle fragile food products
A blueberry packer in Nova Scotia approaches a robotics company about a possible approach to scaling up its packing operations. It hopes to increase throughput by 30% while minimizing damage and maintaining consistent packing weights.
This project involves a technological uncertainty about whether the new robotic packaging system can maintain gentle handling at commercial production volumes.
The robotics company could potentially make an SR&ED claim based on some of the development activities, including systemic experimentation in relation to:
- designing different conveyor configurations
- bruise-rate testing
- throughput analysis
- modifying control algorithms
Food processing companies were awarded 1.3% of Canadian SR&ED’s tax credits in 2025/26 (source: Government of Canada SR&ED annual programme statistics).
Learn more about how Canadian SR&ED can support engineering companies with R&D document review.
Custom waste sorting system
A recycling company’s sorting system is coming to the end of its working life. If the company replaces it with an ‘off the peg’ sorting solution, this work would not be eligible for SR&ED.
But because of technological challenges with the waste, the company decides it could benefit from a ‘smarter’ system that can identify contaminated materials at speed and maintain accuracy under varying light conditions. There are technological uncertainties over whether this is possible.
It commissions a company with AI expertise to develop a machine vision algorithm, carry out robotic sorting experiments and build and optimize prototypes.
Because there is uncertainty in the project, and because experimentation is involved, this work to explore automating waste sorting could be eligible for SR&ED.
Is your R&D work eligible for the SR&ED tax credit? Get in touch with Canadian SR&ED to learn more.
Commissioned R&D work: who gets the tax credit?
In theory, where one company commissions R&D work from another company, both may be entitled to make a claim on the SR&ED program. It depends who has performed the work, who owns the IP and who has borne the financial risk.
The CRA will typically focus on who is trying to attain technological advancement; who carried out the experimentation; who paid for the work; who gets the results and IP; how was the contract written.
It’s best to get SR&ED tax advice where development work has been outsourced as it takes an expert eye to unpick who each expenditure belongs to. If you’ve commissioned R&D work, or you’re carrying out R&D on behalf of another company, get in touch to discuss the situation with one of our SR&ED tax advisers.
Advantages of working with Canadian SR&ED consultants
An SR&ED adviser can complement internal expertise to maximize your claim. They can help you to identify activities eligible for the SR&ED program. They can also provide support with documentation to ensure that it complies with the program’s requirement.
Canadian SR&ED works on a fee on success basis – so you only pay once you’ve received your tax credit. If your claim is unsuccessful, you don’t pay.
Try our SR&ED calculator to see how much you could gain from claiming this tax credit.
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