The question that matters: was there technological uncertainty?
Many business owners ask the wrong question: "Is our product innovative?" The Canada Revenue Agency (CRA) asks another one. It wants to know whether, at the start, your team could not determine in advance whether a result was achievable, because of a gap in scientific or technological knowledge. The CRA calls this technological uncertainty.
A product can be brand new to the market without any SR&ED behind it. Conversely, work that looks ordinary from the outside can qualify if your team had to find a solution that did not exist in the available knowledge.
The two basic requirements
According to the CRA, the work must meet two requirements.
- It advances scientific knowledge or achieves a technological advancement, meaning new knowledge that goes beyond what was previously known.
- It relies on a systematic investigation carried out by experiment or analysis.
A systematic investigation has four steps: defining the problem, developing hypotheses, planning and running tests, and drawing logical conclusions. If your team worked this way, even without calling it that, it is a good sign.
Types of eligible work
The CRA recognizes basic research, applied research and experimental development, which is work that generates technological knowledge to create or improve materials, devices, products or processes. Experimental development is where most SMEs land.
Supporting work can also count when it directly supports the core work: engineering, design, computer programming, mathematical analysis, data collection or testing.
What does not qualify
The CRA excludes, among other things, market research, quality control testing, commercial production, style changes, routine data collection, training, on-the-job learning and hiring expertise that already exists. If your project resembles one of these, you will need to show clearly where the technological uncertainty sits.
Three questions to ask yourself
Before contacting an expert, answer these three questions.
- Did you set out to solve a technical problem whose solution was not known at the start?
- Did you run trials, prototypes or iterations to get there?
- Did you keep records of that work: notes, test results, successive versions?
If you answer yes to one or two of them, the project deserves a closer look. The third matters more than people think: it is what lets you demonstrate the work to the CRA later.
What changed in 2026
The CRA reports several recent changes tied to Bill C-15 (Royal Assent on March 26, 2026). The annual expenditure limit for the enhanced 35% investment tax credit increased from $3 million to $6 million. That limit now phases out over a broader taxable capital range, from $15 million to $75 million. Eligible Canadian public corporations now have access to the enhanced credit, and eligible SR&ED capital expenditures made after December 15, 2024 can be claimed.
The CRA also launched an optional pre-claim approval process on April 1, 2026: you can receive a determination from the CRA within eight weeks, before incurring SR&ED costs. Claim deadlines have not changed: 18 months after the end of the tax year.
When to have your project reviewed
The best time is before your year-end, while the notes, tests and versions are still fresh. Checking afterwards is possible, but rebuilding the documentation of a project that is several months old is slow and uncertain. At Hubvention, we help SMEs determine whether their work qualifies and structure the file. The first step is a 20-minute diagnostic, where we look at what your team actually did and tell you plainly whether it is worth pursuing. Bring your project notes and any test results you still have.