Expenditure Guidelines

Eligible Expenditures from Research Projects Funded by Medical Tithes

As a result of SR&ED initiatives, eligible current and capital SR&ED expenditures are reimbursable under the Canada Revenue Agency (CRA) SR&ED program.

Where there is a project that meets the definition of SR&ED, the following types of expenditures directly attributable to the project can be claimed:

  • Employee salaries related to that project;
  • Materials used in that project*;
  • Payments to contractors for work performed on behalf of the entity for that project (80% eligible); and
  • Payments to “third parties”, such as approved associations or universities, to perform SR&ED work the results of which the entity can make use of for their project (80% eligible).
*The cost of materials used in a project that are consumed or destroyed in the pursuit of R&D can be included in your eligible SRED expenses.

Materials transformed: This translates to materials that have been incorporated or changed into another material or product as a result of the SR&ED project, and that still have some value either to the company or to another party.

Materials consumed: This refers to all materials destroyed or rendered during testing, experimentations, or trial runs of SR&ED projects and now considered as waste or valueless materials. Supplies to build prototypes, test units and even commercial samples are all material costs recoverable under SR&ED. The costs of materials transformed into another product or component for the purpose of SR&ED may also be claimed.

Materials partially consumed: Occasionally, material may be partially consumed in the pursuit of SRED. For example, a component may be altered in such a way that it can no longer be sold for full-value but it does retain some value. In this case, you may claim the difference between the full value and the residual value of the consumed materials.