SR&ED in space and satellite services
Payloads, structures, ground stations, links, environmental testing: the Canadian space sector works permanently at the edge of what has been demonstrated. SR&ED funds that work, including the tests that fail — and there are many.
- Payloads, structures and subsystems
- Ground stations, links and signal processing
- Environmental testing and qualification
SR&ED applied to the space sector
SR&ED is Canada's federal tax credit for scientific research and experimental development. A Canadian-controlled private corporation recovers up to 35 % of its qualifying expenditures as a refundable cash payment, on a base of up to $6M per year; in Québec, the CRIC adds 30 % on the first $1M. Space combines the three conditions that make a claim complex: very long programmes, substantial public funding, and work often performed under contract for a prime.
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The contract determines who claims
When work is performed for a prime contractor or an agency, the intellectual property and risk clauses decide which of the two may claim. That question is settled at signature, not at filing time.
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Qualification contains R&D, not just testing
Vibration, thermal vacuum, electromagnetic compatibility: when a test reveals unforeseen behaviour and a redesign is required, that loop is experimental development. A purely confirmatory test campaign is not.
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Public contributions reduce the base
Agency contributions and industrial development programmes are government assistance: they are subtracted from qualifying expenditures before the credit is computed. In a sector where they are the rule, failing to handle them distorts the entire claim.
Examples of eligible projects
Work that commonly qualifies among our clients in this sector. This list illustrates; it does not enumerate. A project absent from it is not a project excluded.
Commonly qualifying in this domain
- Developing a payload or an onboard subsystem
- Lightweight structures, materials and space environment resistance
- Signal processing, modulation and error correction
- Ground stations, pointing and automated acquisition
- Flight software, autonomy and fault management
- Custom-built test benches and qualification facilities
The sector trap: claiming the whole qualification campaign. A test run to confirm a frozen design, following an established plan, is verification. What qualifies is the analysis and redesign triggered when the test does not give the expected result.
Frequently asked questions
It depends on who bears the technical risk and who retains the intellectual property. A company performing R&D on behalf of a third party, fully paid and bearing no risk, generally does not claim — the customer does. Conversely, a company investing its own funds and keeping the IP claims, even if the result is later sold.
Only in part. A test campaign intended to confirm a settled design is verification, not SR&ED. But when a test reveals unforeseen behaviour — a resonance, a thermal drift, an unmodelled failure — the analysis and redesign that follow are experimental development and are claimable.
Yes. SR&ED does not depend on the project succeeding or reaching market. Expenditures incurred in Canada during the fiscal year remain qualifying even if the programme is later abandoned, and the work done up to that point is often the most uncertain, and therefore the most solidly eligible.
Material consumed or transformed during the work qualifies, including components of a prototype destroyed in testing. Durable equipment does not: it was removed from federal qualifying expenditures. A test bench that stays in service after the project cannot be claimed as material, but the time spent designing it is claimable as salary.
Hubvention is a Canadian firm specialised in public funding: SR&ED, CRIC and sector grants. In space the value turns on three technical points — the contractual allocation of the right to claim, the treatment of public contributions, and the line between qualification and redesign. We handle all three.