SR&ED and CDAE-IA FAQ: 15 Answers to Claim with Confidence

This SR&ED and CDAE-IA FAQ brings together the 15 questions that come up most often in Quebec business files. The answers are intentionally direct and factual, so you can quickly assess your situation and take informed steps.

How to read this SR&ED and CDAE-IA FAQ

This SR&ED and CDAE-IA FAQ is divided into three sections: questions specific to SR&ED, questions specific to CDAE-IA, and finally strategic questions about stacking the two programs.

Each answer is designed to be read independently, so you can go straight to the topics that affect your business.

Questions about SR&ED

The Scientific Research and Experimental Development (SR&ED) program is one of the most generous in Canada. It is open to companies of all sizes and across all sectors.

The business profiles that most often claim SR&ED include:

• Manufacturers developing new processes or improving existing equipment
• Software companies solving technical challenges beyond standard solutions
• Biotechnology and life sciences companies in applied research stages
• Agri-food producers developing new products or processing methods
• Engineering firms working on prototypes or new technical systems

Is my project eligible for SR&ED?

To be eligible, your project must seek to resolve a technological uncertainty through a systematic approach. You must demonstrate scientific or technological advancement, even if the final goal was not achieved. Eligibility does not depend on industry: manufacturing, software, biotechnology, agri-food — all can claim. The SR&ED 101 guide details the eligibility criteria so you can better situate your project.

Which expenses are eligible for SR&ED?

The main categories include the salaries of involved employees, subcontract work, materials consumed or transformed, and certain overhead costs. The portion of each expense must be directly attributable to eligible R&D work. Solid accounting allocation and rigorous time tracking are essential to support the claim.

What is the SR&ED reimbursement rate?

The rate varies depending on the size of the company and the province. In Quebec, an eligible SMB can receive a combined federal and provincial refund exceeding 50% of eligible expenses. Public corporations and large companies benefit from a more modest rate, but the credit remains substantial.

What documentation should I keep?

The CRA requires contemporaneous documentation. This means evidence must be created as the project progresses, not reconstructed after the fact. Time tracking, meeting minutes, code versions and technical reports are key sources. A practical guide on SR&ED documentation sets out the expectations.

How long does it take to process an SR&ED claim?

The CRA aims to process refundable claims within 60 days and other files within 365 days. These timelines lengthen in case of questions or audits. A well-documented claim from the start speeds up the process.

What are the most common SR&ED mistakes?

Typical mistakes include lack of contemporaneous documentation, poor allocation of hours, omission of clear technological uncertainties and confusion between product development and eligible work. The SR&ED claim errors that lead to refusal are often avoidable with proper guidance.

Can I claim SR&ED for past projects?

Yes, you can generally claim retroactively up to 18 months after the end of the fiscal year. This window is strict: past that deadline, the right to the credit is lost. Companies that discover the program late should act quickly to recover what can still be claimed.

Let’s continue this SR&ED and CDAE-IA FAQ with questions specific to the provincial component, which underwent significant changes in the Quebec 2025 budget.

Questions about CDAE-IA

CDAE-IA is a Quebec tax credit designed for companies specialized in information technology that integrate artificial intelligence in a significant way.

The business profiles that most often claim CDAE-IA include:

• SaaS platform publishers integrating predictive or generative AI features
• Custom software development firms serving business clients
• Advanced analytics and data processing companies
• Video game studios integrating AI systems into their titles
• Cybersecurity companies using machine learning for threat detection

Who can claim CDAE-IA?

CDAE-IA targets Quebec companies active in high-value-added innovative activities in the IT sector, with significant AI integration in their solutions. Software companies, SaaS platforms and analytics solutions are particularly targeted. The CDAE-IA guide for SaaS companies explores the criteria in detail.

What is the difference between CDAE and CDAE-IA?

CDAE-IA is gradually replacing the traditional CDAE. The new credit requires significant integration of artificial intelligence, which was not a condition under the previous program. The changes were announced in the Quebec 2025 budget.

What is significant AI integration?

Significant integration means that AI is a central and differentiating element of the solution, not a simple cosmetic add-on. The AI feature must materially improve the value delivered to the customer. Documentation of the architecture, models used and benefits provided is essential.

Which expenses are eligible for CDAE-IA?

The credit primarily targets salaries paid to eligible employees working on innovative activities. Strict criteria govern employee eligibility, including the number of hours worked and the nature of tasks. The CDAE employee eligibility criteria remain broadly applicable to CDAE-IA.

What is the CDAE-IA credit rate?

CDAE-IA offers a refundable tax credit on eligible salaries, with a per-employee cap. The exact parameters were adjusted with the move to CDAE-IA, making a personalized analysis necessary to estimate a company’s exact return. The official terms are published by Revenu Québec on its tax credits page.

Beyond an SR&ED and CDAE-IA FAQ, every business benefits from validating its real eligibility. Talk to an expert to quickly assess the programs your company is eligible for and identify potential returns.

Questions about stacking and strategy

This last part of the SR&ED and CDAE-IA FAQ addresses the strategic issues leaders often raise toward the end of the journey, once the eligibility basics are understood.

Program	Type	Level	Compatibility
SR&ED	Tax credit	Federal and provincial	Stackable with CDAE-IA and several grants
CDAE-IA	Tax credit	Quebec provincial	Stackable with SR&ED under conditions
CRIC	Tax credit	Quebec provincial	Separate program, to be analyzed case by case

Can I stack SR&ED and CDAE-IA on the same project?

Yes, in many cases stacking is allowed. SR&ED funds research and development work, while CDAE-IA targets innovative operational activities integrating AI. The boundary between the two must be clearly documented to avoid expense overlaps. A comparative SR&ED vs CDAE-IA analysis helps structure projects to maximize returns.

Is stacking with other grants possible?

Yes, several provincial and federal grants are compatible with tax credits. However, government assistance rules sometimes provide for a reduction of the credit when a grant funds the same expenses. According to the government assistance rules documented on the official CRA SR&ED program page, poorly structured stacking can result in a reduction of the credit when the grant funds the same expenses, making planning particularly important.

What should I do in case of an audit?

An audit does not mean a refusal. It is an in-depth review that can be well managed if documentation has been built correctly from the start. The role of a consultant is notably to defend the claim, answer technical questions and provide the additional evidence requested. Working with an SR&ED consultant significantly reduces the risk of an unfavourable audit.

Conclusion

This SR&ED and CDAE-IA FAQ covers the most frequent issues: eligibility, documentation, stacking and audits. Properly understanding the rules, documenting rigorously and structuring claims correctly make the difference between an optimal return and missed funding.

Documenting continuously rather than after the fact remains the golden rule, and the 18-month retroactive window after the end of the fiscal year must be strictly respected. An audit, moreover, does not mean a refusal if documentation has been built correctly from the start.

Every situation remains unique. A personalized analysis identifies the applicable programs and the stacking potential.

To assess your eligibility and build a tailored strategy, talk to an Avinova expert today.