SR&ED + Ontario OITC
Qualifying businesses may recover up to ~43% of AI R&D costs as refundable tax credits.
The Scientific Research and Experimental Development (SR&ED) program is Canada's largest R&D tax incentive. Combined with Ontario's Innovation Tax Credit (OITC), it can offset a significant portion of your AI project cost — including work performed by arm's-length contractors like ReadyIQ.
What SR&ED is — and what it is not
SR&ED is a federal tax incentive administered by the CRA. It rewards Canadian businesses that advance scientific or technological knowledge, or develop new or improved processes, products, or materials. The key test: the work must attempt to resolve a technological uncertainty — not just apply existing knowledge.
"We used a pre-built ChatGPT plugin" generally does not qualify. "We developed a custom model fine-tuned on our proprietary data to solve a classification problem no off-the-shelf model could handle" likely does. The line matters. A qualified SR&ED preparer is essential to assess it.
Official program page — canada.ca → · Program details last verified June 10, 2026.
Federal SR&ED (ITC)
15%–35%
15% for large corporations; up to 35% refundable for Canadian-Controlled Private Corporations (CCPCs) on up to $6M of eligible expenditures annually (limit raised from $3M in March 2026).
Ontario OITC
+8%
Ontario adds an 8% refundable tax credit on qualifying R&D expenditures performed in Ontario — stackable with federal SR&ED.
Combined (CCPC in Ontario)
~43%
A qualifying CCPC with Ontario operations may be eligible for up to ~43% in refundable credits on eligible spend within the annual expenditure limit.
Arm's-length contractors
80%
Eligible expenditures include 80% of amounts paid to arm's-length subcontractors for SR&ED work — this is how ReadyIQ engagements can qualify.
How ReadyIQ engagements can fit SR&ED
Not every ReadyIQ engagement will qualify, and we will tell you that plainly. Qualification requires genuine technological uncertainty: building a custom AI system for a novel business problem where the right approach is not known in advance. When that bar is met, 80% of what you pay ReadyIQ (as an arm's-length contractor) may be eligible as an SR&ED expenditure.
Eligible examples
- ✓Developing a proprietary document-classification model fine-tuned on your data
- ✓Building an AI orchestration system that integrates multiple tools in a way not previously documented
- ✓Designing and testing a novel retrieval-augmented generation architecture for your domain
- ✓Research into whether a specific AI approach can achieve a business outcome — including negative results
Generally not eligible
- ✗Configuring off-the-shelf SaaS tools with no custom development
- ✗Standard software integration where the approach is well-known
- ✗Routine data entry, cleanup, or formatting work
- ✗Prompting a commercial AI model without underlying R&D work
How it works
The SR&ED process with ReadyIQ
Discovery — does your project qualify?
We review your specific project. If there is a credible SR&ED angle, we flag it early and recommend a qualified SR&ED tax consultant to assess it formally.
Documentation during the engagement
Throughout the project we maintain technical records — hypotheses, approaches, experiments, results — in a form that supports a SR&ED claim. Strong technical notes are the foundation of a successful filing.
Handoff to your SR&ED preparer
At project close, we deliver a technical summary your SR&ED preparer can work from directly. We answer CRA technical questions during review if needed.
You receive the credit
The CRA processes the claim (turnaround varies). For CCPCs operating in Ontario, a refund of ~43% on eligible expenditures is possible — reducing your net project cost materially.
Stack SR&ED with other programs
Could your AI project qualify?
In a 30-minute call we can assess whether your project has a credible SR&ED angle and outline next steps — including finding a qualified SR&ED preparer.