Eligibility of work for SR&ED recording Little-known Sectors that Qualify for SR&ED Part Two: Medical and Health Sciences

Uncovering the little-known sectors that qualify for SR&ED: Medical

Last time, we looked at the agriculture and agri-food industry as an example of a sector where most people do not know they can qualify for an SR&ED tax credit. This time we will look at the medical and health sciences field. This may be Canada’s most research-intensive sector, but it has not historically taken advantage of the SR&ED tax credit. This is due partially to the amount of administration needed to submit a claim and complexity surrounding the submission of claims.

The complexity comes from the fact that medical doctors can work in universities, hospitals, and biotechnology and pharmaceutical companies. The broad umbrella that medical research falls under can make figuring out which aspects of a medical research project are eligible a frustrating experience.

However, just like in the case of agriculture, you can apply if you have done any systematic investigation, whether it was successful or not. As research grants shrink, a SR&ED tax credit is a good source of capital to apply for.

Can Medical Doctors Really Apply for SR&ED?

You may be running a practice and feel that you don’t do any R&D. The truth is, you probably do more than you realize. If you generate new information or discover new knowledge in your practice or perform clinical trials, you can probably qualify. If you have a medical hypothesis that can be tested with data from your practice or place of work, such as a university or hospital, you might qualify for an SR&ED tax credit, too.

If you are a family doctor who solely prescribes flu and cold medications for patients, you are probably not performing SR&ED. However, if you run a fertility clinic, do dental implants, run a rehabilitation or pain clinic, you may qualify. You would need to develop a hypothesis and test the hypothesis via data collected in your practice.  If you have done this, you may qualify for a SR&ED tax credit.

The CRA SR&ED Glossary defines “uncertainty” as:

Scientific or technological uncertainty means whether a given result or objective can be achieved or how to achieve it, is not known or determined on the basis of generally available scientific or technological knowledge or experience. This definition encompasses the definition of scientific uncertainty, technological uncertainty and technological obstacle. The only difference is that scientific uncertainty relates to science whereas technological uncertainty and technological obstacle relate to technology.

You have to be careful, though, because if you perform medical studies, the outcomes being investigated could be considered to be in the social sciences, which do not qualify for an SR&ED credit. For instance, if your study examines whether patients are satisfied with one treatment over another (a subjective, qualitative measurement), could be construed as part of the social sciences. Sometimes, case reports lack a hypothesis, and narrative review articles do not undertake a systematic investigation. Those types of medical projects would not qualify for SR&ED.

However, if you were undertaking a study to determine if one treatment over another would lead to cost savings in the health system while you observe associated health outcomes, you might be able to claim SR&ED. You would have to claim expenditures in the form of time related to the health outcome assessment while excluding the economic impact of your study. When in doubt, it is a good idea to hire a consultant who knows the various nuances of the SR&ED tax credit.

A Recent Court Case

There was a recent court case that revolved around natural health products, and whether they could qualify for an SR&ED tax credit. In Life Choice Ltd. v. The Queen, Life Choice Ltd. (the appellant) had developed three natural health products: one was a treatment for cancer, another was to be used in reversing neurological degradation, and the third removed arterial plaque in the treatment of vascular disease. All three products mimicked existing pharmaceutical products on the market.

While the appellant failed to win the case, it was not because natural health products were seen as shoddy medicine. In fact, the judge was prepared to accept that there was scientific uncertainty in each of the three projects and even accepted the hypothesis that these products could mimic the properties found in pharmaceutical products. Where the case failed was because the appellant had not kept any detailed records to support their hypothesis or any of the results. Had Life Choice Ltd. been more diligent in keeping paperwork, it seems reasonable that they would have qualified for an SR&ED tax credit.

Don’t Forget to Review the T4088 Appendix

When making your claim, do not forget to look at the appendix for the T4088 Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661. You will need to select the field of science or technology that best describes the primary field in which the SR&ED project was attempting to achieve an advancement and insert this code into line 206 of the T661 form. The project qualifying for a tax credit may be different from the field of science or technology as the overall company project or business that your company carries out on a regular basis. Failing to fill in this line could impact the eligibility of your application.

The codes related to the medical and health sciences are as follows:

Medical engineering

  • 2.06.01 – Medical and biomedical engineering
  • 2.06.02 – Medical laboratory technology (biomaterials under 2.09.05)

Basic medicine

  • 3.01.01 – Anatomy and morphology (plant science under 1.06.08)
  • 3.01.02 – Human genetics
  • 3.01.03 – Immunology
  • 3.01.04 – Neurosciences
  • 3.01.05 – Pharmacology and pharmacy and medicinal chemistry
  • 3.01.06 – Toxicology
  • 3.01.07 – Physiology and cytology
  • 3.01.08 – Pathology

Clinical medicine

  • 3.02.01 – Andrology
  • 3.02.02 – Obstetrics and gynaecology
  • 3.02.03 – Paediatrics
  • 3.02.04 – Cardiac and cardiovascular systems
  • 3.02.05 – Haematology
  • 3.02.06 – Anaesthesiology
  • 3.02.07 – Orthopaedics
  • 3.02.08 – Radiology and nuclear medicine
  • 3.02.09 – Dentistry, oral surgery, and medicine
  • 3.02.10 – Dermatology, venereal diseases, and allergy
  • 3.02.11 – Rheumatology
  • 3.02.12 – Endocrinology and metabolism and gastroenterology
  • 3.02.13 – Urology and nephrology
  • 3.02.14 – Oncology

Health sciences

  • 3.03.01 – Health care sciences and nursing
  • 3.03.02 – Nutrition and dietetics
  • 3.03.03 – Parasitology
  • 3.03.04 – Infectious diseases and epidemiology
  • 3.03.05 – Occupational health

Medical biotechnology

  • 3.04.01 – Health-related biotechnology
  • 3.04.02 – Technologies involving the manipulation of cells, tissues, organs, or the whole organism
  • 3.04.03 – Technologies involving identifying the functioning of DNA, proteins, and enzymes
  • 3.04.04 – Pharmacogenomics, gene-based therapeutics
  • 3.04.05 – Biomaterials (related to medical implants, devices, sensors)

Other medical sciences

  • 3.05.01 – Forensic science
  • 3.05.02 – Other medical sciences


As you can see, there are opportunities to obtain capital from SR&ED tax credits under certain circumstances. As long as you are working to resolve a scientific uncertainty and have the documentation to back up your findings, the chances are good that you can qualify. Nothing is guaranteed, of course, but there are more avenues to anbtain a SR&ED tax credit than you may realize if you are in the medical and health sciences profession.

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Or even better, sign up for the Comprehensive Guide to SR&ED.


Maurice G · September 29, 2017 at 2:27 pm

Just a little note about your statement regarding T661 Line 206 that failing to fill in this line could impact the eligibility of your application. Some easily forgotten explanations are given in the Guide to Form T661, including the following:

The field of science and technology you enter on this line is used for statistical and resource management purposes only and not for the purpose of determining eligibility of the work. Appendix 1 is not an exhaustive list of all eligible fields of science or technology.

Though Line 206 is said to be for statistical purposes only, I’m sure the reviewers will treat this as an eligibility requirement, so I end up agreeing with you that this line is very relevant to the eligibility of your application.

    ElizabethM · October 11, 2017 at 12:36 pm

    Hi Maurice, Thank you for your comment. You’re right – it’s better to be safe and accurate in all parts of the T661 than risk having the claim reviewed or denied.

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