SR&ED for manufacturing
A production problem does not become SR&ED just because it is expensive or stubborn.
The question is whether the available knowledge could resolve it, and whether the team investigated the gap through experiments or analysis.
In manufacturing, that investigation may sit inside process trials, material substitutions, tooling iterations or scale-up work. The surrounding production activity still needs to be separated from it.
Manufacturing work worth a closer eligibility review
These examples point to questions worth reviewing. The category does not establish eligibility without the required advancement purpose and systematic investigation.
- Process development where known methods could not meet a defined tolerance, yield or cycle-time constraint.
- Material substitutions where behaviour under the actual operating conditions could not be determined from the available knowledge.
- Tooling or automation work that tested hypotheses beyond engineering to a known specification.
- Scale-up experiments where a bench result did not predict performance at pilot or production volume.
Separate experiments from normal production
Routine production, quality control, tooling built to a known specification and standard equipment commissioning generally fall outside SR&ED. Testing or engineering can be eligible support work when it directly supports and is commensurate with eligible experimental work; the label on the department does not decide the result.
Build the record from the floor
Process-trial sheets, scrap and yield data, test reports, engineering changes and run logs can show how an investigation progressed. Keep the routine baseline beside the experimental result; the contrast often explains more than a polished filing-time summary.
SREDlog organizes approved records against the project and connects reviewed costs to the supporting run or test. It does not decide that the work or expenditure is eligible.
Frequently asked questions
Not by itself. Standard acquisition and commissioning are routine. Separate experimental work may qualify if it meets both CRA requirements, and certain equipment lease or capital expenditures incurred after December 15, 2024 may be allowable under their own detailed rules.
Routine testing to confirm a known specification is expressly excluded. Testing may be eligible support work only when it directly supports and is commensurate with qualifying research or experimental development.
Keep the records that show the problem, planned trial, changed variable, result and conclusion, together with the people, time and costs involved. Process-trial records, yield or scrap data, test reports and change notes can all help. See documentation requirements.
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These industry examples are prompts for a fact-specific review, not categories guaranteed to qualify. Work must be conducted in Canada and meet both current CRA requirements; support work must directly support and be commensurate with eligible work. This is general information, not tax advice, and has not been reviewed by an independent qualified tax professional. See our editorial policy.