SR&ED stands for Scientific Research and Experimental Development.
SR&ED (or SRED, as it's sometimes called) is of particular interest to business because it's a federal tax incentive program, administered by the Canada Revenue Agency (CRA). The SR&ED program "encourages Canadian businesses of all sizes, and in all sectors to conduct research and development (R&D) in Canada" (Canada Revenue Agency) by providing cash refunds and/or tax credits for expenditures on eligible R&D work done in Canada. The SR&ED program is the main source of federal government support for R&D.
To qualify for the SR&ED tax incentive program, the work a company performs "must advance the understanding of scientific relations or technologies, address scientific or technological uncertainty, and incorporate a systematic investigation by qualified personnel" (Canada Revenue Agency).
This SR&ED definition of work provides a wide scope for SR&ED claims. Business activities such as experiments, research and data collection could qualify for an SR&ED claim, but so could activities such as hiring and/or the direct supervision of employees. How to Identify SR&ED-Eligible Projects explains more about the kinds of work that can qualify as SR&ED projects.
The most common misconception about the SR&ED program is that it's only for large businesses or corporations. In fact, small businesses have equal access to the SRED tax incentive program and sole proprietorships and partnerships can apply. (See Don't Miss Out on the SR&ED Tax Credit Program.)
