Custom builds can qualify — if you structure the claim right.
SR&ED is Canada’s federal tax credit for eligible research and development work. Agencies building custom software often perform eligible work for clients. Who can claim depends on the contract and who bears the financial risk.
No credit, no fee.
Free eligibility check
Examples of eligible work
- Building custom systems where the technical approach wasn't known upfront
- Integrating legacy or proprietary systems with poor documentation
- Performance or scale problems on client platforms
- Internal tooling, frameworks or accelerators your team developed
- Experimenting with new technologies to meet client requirements
Common mistakes
- Not checking contracts for who owns the IP and bears the risk
- Double-claiming the same work as your client
- Claiming standard website or app builds
- Forgetting internal R&D on your own tooling
- Poor time tracking by project
Worked example
12 developers at $95,000 CAD, 25% SR&ED time, $60,000 CAD in arm's-length contractors. Ontario CCPC.
| SR&ED salaries | $285,000 CAD |
|---|---|
| Overhead proxy (55%) | $156,750 CAD |
| Contractors (80%) | $48,000 CAD |
| Materials | $0 CAD |
| Ontario credit (8%) | $39,180 CAD |
| Federal credit | $157,700 CAD |
| Total credit | $196,880 CAD |
| Our fee (15%) | $29,532 CAD |
| You keep | $167,348 CAD |
Agencies should confirm who owns the work. If the client contract gives the client the rights to the results, the client may be the one entitled to claim.
Illustrative estimate for a CCPC. Not tax advice.
What CRA expects to see
- Project-level records created at the time of the work: tickets, commits, pull requests, design docs, test and benchmark results
- A clear statement of the technological uncertainty at the start
- The hypotheses you tested and what happened, including what failed
- Timesheets or a reasonable time-allocation method for each person claimed
Questions we hear often
Who claims — us or our client?
Generally the party that bears the financial risk and has rights to the results. Fixed-price contracts often favour the agency; we review your contracts to confirm.
Can we claim our internal tools?
Yes. Internal frameworks and tooling that resolved technical uncertainty are often the cleanest part of an agency claim.
Do offshore contractors count?
No. SR&ED requires work performed in Canada; only Canadian contractor payments generally qualify.
Find out what your R&D is worth.
Estimate your credit or book an assessment.