SR&ED covers a broad number of disciplines.

SR&ED covers a broad number of disciplines.

In this article, we discuss which fields of science and technology are – and are not – eligible for SR&ED. It is very important that claimants understand the eligibility criteria for the SR&ED tax credits. Only certain fields of research are able to apply to receive these tax credits. Those fields will be discussed in further detail below.

The Scientific Research and Experimental Development (SR&ED) program is administered by the Canada Revenue Agency as an income tax credit incentive available to Canadian Controlled Private Corporations (CCPCs). The goal of the SR&ED program is to encourage industrial research and development in science and technology and to foster advancements in industrial R&D.

What is SR&ED?

The SR&ED Investment Tax Credit program is the largest initiative offered by the Federal Government and over $3billion in tax incentives are distributed annually.1

The Canada Revenue Agency summarizes the Scientific Research and Experimental Development program as follows:

The Scientific Research and Experimental Development (SR&ED) Program is a federal tax incentive program designed to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada. The program is administered by the Canada Revenue Agency (CRA), which delivers SR&ED tax incentives in a timely, consistent and predictable manner, while encouraging businesses to prepare their claims in compliance with Canada’s tax laws and the CRA’s policies and procedures.2

More specifically, it is defined in the Income Tax Act as:

Scientific research and experimental development means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis.3

It is important to understand which specific fields of science and technology are eligible to receive SR&ED tax credit support. The list of eligible fields is outlined in Appendix 1 of the T4088 – Guide to the T661. This information is required to be entered on line 206 of the T661. It is imperative that the correct discipline is selected as this can affect your claim going forward in terms of who reviews it and how it is assessed. Read on for additional information.

SR&ED T661 Form – Where do field codes appear?

At the very top of the second page of the T661, you will find line 206. This is where you will insert your selected field of science or technology. 

The CRA uses this information to help understand the context in which you are claiming an advancement.

In short, they use this question to ask: did the organization achieve (or attempt to achieve) an advancement in the identified field of science or technology?

Fields of Science or Technology

There are four main fields of science and technology that are further subdivided to cover a variety of disciplines. Each of the increasingly specific disciplines has a unique code that is required when submitting forms. The high-level classifications are:

  • Natural & Formal Sciences
  • Engineering & Technology
  • Medical & Health Sciences
  • Agricultural Sciences

What follows is a brief summary of each main area, followed by some examples of the more specific codes.

Natural & Formal Sciences

In this section, researchers study math, logic and statistics, as well as natural phenomena, such as astrology, geology, physical, chemical and biological factors of the universe.4

Mathematics

    • 1.01.01 – Pure mathematics
    • 1.01.02 – Applied mathematics
    • 1.01.03 – Statistics and probability

As mentioned above, mathematics (the science of numbers) is considered a formal science. This is because the method by which mathematicians verify knowledge and confirm results is a priori (or deductive), rather than empirical (based on observation). However, mathematics shares some similarities with empirical sciences in that it also “involves an objective, careful and systematic study of an area of knowledge.”5

Computer and information sciences

    • 1.02.01 – Computer sciences
    • 1.02.02 – Information technology and bioinformatics 
      (software engineering and technology under 2.02.09) 
      (hardware development under 2.02.08)

Wikipedia defines computer science as “the study of processes that interact with data and that can be represented as data in the form of programs.”6 Computer science, like engineering or medicine, is an applied science, meaning the application of scientific knowledge is transferred into a physical environment.7

Physical sciences

    • 1.03.01 – Atomic, molecular, and chemical physics
    • 1.03.02 – Interaction with radiation
    • 1.03.03 – Magnetic resonances
    • 1.03.04 – Condensed matter physics
    • 1.03.05 – Solid state physics and superconductivity
    • 1.03.06 – Particles and fields physics
    • 1.03.07 – Nuclear physics
    • 1.03.08 – Fluids and plasma physics (including surface physics)
    • 1.03.09 – Optics (including laser optics and quantum optics)
    • 1.03.10 – Acoustics
    • 1.03.11 – Astronomy (including astrophysics and space science)

The term physical science includes the areas of natural science that study non-living systems. That said, many fields of natural sciences include biological phenomena.8 Physics, for example, follows the study of matter and its motion through space and time, along with the related concepts of energy and force.9 The branch of physics known as acoustics is the study of mechanical waves in gases liquids and solids and includes such topics as vibration, ultra- and infra-sound.10

Astronomy applies mathematics, physics and chemistry to study celestial objects and phenomena in an effort to explain their origins.11

Chemical sciences

    • 1.04.01 – Organic chemistry
    • 1.04.02 – Inorganic and nuclear chemistry
    • 1.04.03 – Physical chemistry, polymer science, and plastics
    • 1.04.04 – Electrochemistry (dry cells, batteries, fuel cells, metal corrosion, electrolysis)
    • 1.04.05 – Colloid chemistry
    • 1.04.06 – Analytical chemistry

Chemistry is a natural science that is occasionally referred to as the central science as it spans both basic and applied science disciplines at a fundamental level and provides a deeper understanding of aspects of geology, pharmacology and even forensics. Chemists study “elements and compounds composed of atoms, molecules and ions” to determine their properties and how those properties change in reaction to the introduction of other substances.12

Earth and related environmental sciences

    • 1.05.01 – Geosciences, multidisciplinary
    • 1.05.02 – Mineralogy and palaeontology
    • 1.05.03 – Geochemistry and geophysics
    • 1.05.04 – Physical geography
    • 1.05.05 – Geology and volcanology
    • 1.05.06 – Environmental sciences
    • 1.05.07 – Meteorology, atmospheric sciences, and climatic research
    • 1.05.08 – Oceanography, hydrology, and water resources

The field of earth science or geoscience encompasses all fields related to the plant including the study of the atmosphere, oceans and biosphere in addition to the solid earth. Earth scientists seek to determine how the Earth evolved and how it continues to evolve and work.13

Biological sciences

    • 1.06.01 – Cell biology, microbiology, and virology
    • 1.06.02 – Biochemistry, molecular biology, and Biochemical research
    • 1.06.03 – Mycology
    • 1.06.04 – Biophysics
    • 1.06.05 – Genetics and heredity (medical genetics under code 3)
    • 1.06.06 – Reproductive biology (medical aspects under code 3)
    • 1.06.07 – Developmental biology
    • 1.06.08 – Plant sciences and botany
    • 1.06.09 – Zoology, ornithology, entomology, and behavioural sciences biology
    • 1.06.10 – Marine biology, freshwater biology, and limnology
    • 1.06.11 – Ecology and biodiversity conservation
    • 1.06.12 – Biology (theoretical, thermal, cryobiology, biological rhythm)
    • 1.06.13 – Evolutionary biology

The biological sciences mentioned above are focused on the study of life and living organisms from their structure to their chemical processes, molecular interactions and development and evolution. Biologists recognize the cell as the basic unit of life, genes as the basic unit of heredity and evolution as what causes the creation and extinction of any species.14

Other natural sciences

    • 1.07.01 – Other natural sciences15

Engineering and Technology

Both engineering and technology are considered applied sciences, like math and physics mentioned above. These sciences are important for the development of industrial R&D. Engineering combines math with empirical evidence to innovate, create, design, construct, operate and maintain structures, machines, software and devices.16

The wide variety of sub-categories of engineering are listed below and are fairly self-explanatory.

Civil engineering

    • 2.01.01 – Civil engineering
    • 2.01.02 – Architectural engineering
    • 2.01.03 – Municipal and structural engineering
    • 2.01.04 – Transport engineering

Electrical engineering, electronic engineering, and information technology

    • 2.02.01 – Electrical and electronic engineering
    • 2.02.02 – Robotics and automatic control
    • 2.02.03 – Micro-electronics
    • 2.02.04 – Semiconductors
    • 2.02.05 – Automation and control systems
    • 2.02.06 – Communication engineering and systems
    • 2.02.07 – Telecommunications
    • 2.02.08 – Computer hardware and architecture
    • 2.02.09 – Software engineering and technology

Mechanical engineering

    • 2.03.01 – Mechanical engineering
    • 2.03.02 – Applied mechanics
    • 2.03.03 – Thermodynamics
    • 2.03.04 – Aerospace engineering
    • 2.03.05 – Nuclear related engineering (nuclear physics under 1.03.07)
    • 2.03.06 – Acoustical engineering
    • 2.03.07 – Reliability analysis and non-destructive testing
    • 2.03.08 – Automotive and transportation engineering and manufacturing
    • 2.03.09 – Tooling, machinery, and equipment engineering and manufacturing
    • 2.03.10 – Heating, ventilation, and air conditioning engineering and manufacturing

Chemical engineering

    • 2.04.01 – Chemical engineering (plants, products)
    • 2.04.02 – Chemical process engineering

Materials engineering

    • 2.05.01 – Materials engineering and metallurgy
    • 2.05.02 – Ceramics
    • 2.05.03 – Coating and films (including packaging and printing)
    • 2.05.04 – Plastics, rubber, and composites (including laminates and reinforced plastics)
    • 2.05.05 – Paper and wood and textiles
    • 2.05.06 – Construction materials (organic and inorganic)

Medical engineering

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

Environmental engineering

    • 2.07.01 – Environmental and geological engineering
    • 2.07.02 – Petroleum engineering (fuel, oils)
    • 2.07.03 – Energy and fuels
    • 2.07.04 – Remote sensing
    • 2.07.05 – Mining and mineral processing
    • 2.07.06 – Marine engineering, sea vessels, and ocean engineering

Environmental biotechnology

    • 2.08.01 – Environmental biotechnology
    • 2.08.02 – Bioremediation
    • 2.08.03 – Diagnostic biotechnologies in environmental management (DNA chips and biosensing devices)

Industrial biotechnology

    • 2.09.01 – Industrial biotechnology
    • 2.09.02 – Bioprocessing technologies
    • 2.09.03 – Biocatalysis and fermentation
    • 2.09.04 – Bioproducts (products that are manufactured using biological material as feedstock)
    • 2.09.05 – Biomaterials (bioplastics, biofuels, bioderived bulk and fine chemicals, bio-derived materials)

Nano-technology

    • 2.10.01 – Nano-materials (production and properties)
    • 2.10.02 – Nano-processes (applications on nano-scale)

Other engineering and technologies

    • 2.11.01 – Food and beverages
    • 2.11.02 – Oenology
    • 2.11.03 – Other engineering and technologies17

Medical and Health Sciences

Also in the field of applied science, medical & health sciences encompass the practice of determining the diagnosis, prognosis, treatment and prevention of illness and disease. In addition, this discipline and the subfields listed below attempt to maintain and restore health through scientific and therapeutic methods.18

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 sciences19

Agricultural Sciences

Sometimes confused with agriculture and agronomy (the R&D related to the study and improvement of plant-based crops), agricultural sciences include many multidisciplinary aspects of biology, as well as the exact, natural, economic and social sciences used in the practice and understanding of agriculture as well as veterinary science.20

The list of specific fields included in the discipline of agricultural sciences below should provide additional clarification as to what is included in this field of study.

Agriculture, forestry, and fisheries

    • 4.01.01 – Agriculture
    • 4.01.02 – Forestry
    • 4.01.03 – Fisheries and aquaculture
    • 4.01.04 – Soil science
    • 4.01.05 – Horticulture
    • 4.01.06 – Viticulture
    • 4.01.07 – Agronomy
    • 4.01.08 – Plant breeding and plant protection (agricultural biotechnology under 4.04.01)

Animal and dairy science

    • 4.02.01 – Animal and dairy science
    • 4.02.02 – Animal husbandry (animal biotechnology under 4.04.01)

Veterinary science

    • 4.03.01 – Veterinary science (all)

Agricultural biotechnology

    • 4.04.01 – Agricultural biotechnology and food biotechnology
    • 4.04.02 – Genetically modified (GM) organism technology and livestock cloning
    • 4.04.03 – Diagnostics (DNA chips and biosensing devices)
    • 4.04.04 – Biomass feedstock production technologies
    • 4.04.05 – Biopharming

Other agricultural sciences

    • 4.05.01 – Other agricultural sciences21

For the complete list please see Appendix 1 of the T4088 – Guide to Form T661.22

Other Related Sciences Fields

Under each of the main headings, you will also find a more general “other related sciences” in the event that your project doesn’t fit neatly into any one given field. While this does provide some additional flexibility in instances where your project does not slot neatly into any one specific area, you should reflect with care when making your selection. In most cases, your claim reviewer will be assigned based on their level of familiarity with your area of research. In the event of a claim review, you may be required to defend your position relating to why you selected the field you chose. 

What fields are excluded from SR&ED?

The majority of the science related disciplines are eligible to apply for SR&ED credits, however, key exclusions are in the fields of social sciences and the humanities. Subsection 248(1) of the Income Tax Act explains why these fields are ineligible:

Scientific research and experimental development means systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis . . .but does not include work with respect to . . .research in the social sciences or the humanities.23

The exact list as outlined in Appendix 1 of the T4088 – Guide to Form T661 is as follows: 

The following fields of science are specifically excluded under subsection 248(1) of the Income Tax Act, definition of “scientific research and experimental development” for the purposes of SR&ED:

    • Social sciences
      • Psychology (psychological research may be eligible as a support activity)
      • Sociology
      • Social and economic geography
      • Economics and business
      • Law
      • Media and communications
      • Educational sciences
      • Political science
      • Other social sciences
    • Humanities
      • History and archaeology
      • Arts
      • Languages and literature
      • Other humanities
      • Philosophy, ethics, and religion24.

That is not to say that you cannot undertake R&D in these fields; however, you cannot claim any SR&ED tax incentives in relation to that work.

The one exception is Psychology, which may be allowed, but only as a support activity and not as the full focus of the project.25

How can I use this knowledge to improve my future claims?

Knowledge is power. The more clear you are about the advancement you achieve (or attempted to achieve) and how it relates to your identified field of science or technology, the easier it will be for the CRA assessors to understand your project and approve your claim. If you can articulate the uncertainty as it relates to the field of science or technology and how you sought to generate the information/knowledge required to advance your understanding and increase the broader understanding of others in the field, the eligibility of your work as pertains to SR&ED will be apparent.

Show 25 footnotes

  1. Government of Canada. (2015, April 7). Evolution of the SR&ED Program Retrieved April 4, 2019, from https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/evolution-program-a-historical-perspective.html
  2. Government of Canada. (2018, June 26). Claiming SR&ED Tax Incentives. Retrieved April 9, 2019, from: https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/claiming-tax-incentives.html
  3. Government of Canada. (2019, March 26). Income Tax Act. Retrieved April 9, 2019, from: https://laws-lois.justice.gc.ca/eng/acts/I-3.3/page-267.html?txthl=humanities#s-248
  4. Wikipedia. (2019, May 8). Branches of Science. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Branches_of_science
  5. Ibid.
  6. Wikipedia. (2019, May 8). Computer Science. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Computer_science
  7. Wikipedia. (2019, May 8). Branches of Science. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Branches_of_science
  8. Ibid.
  9. Ibid.
  10. Wikipedia. (2019, May 5). Astronomy. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Acoustics
  11. Wikipedia. (2019, May 8). Astronomy. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Astronomy
  12. Wikipedia. (2019, May 8). Chemistry. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Chemistry
  13. Wikipedia. (2019, May 8). Branches of Science. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Branches_of_science
  14. Wikipedia. (2019, April 21). Biology. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Biology
  15. Government of Canada. (2018, June 22). T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661. Retrieved March 20, 2019, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html#prt3
  16. Wikipedia. (2019, May 7). Engineering. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/Engineering
  17. Government of Canada. (2018, June 22). T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661. Retrieved March 20, 2019, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html#prt3
  18. Wikipedia. (2019, April 19). Medicine. Retrieved May 10, 2019, from https://en.wikipedia.org/wiki/Medicine
  19. Government of Canada. (2018, June 22). T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661. Retrieved March 20, 2019, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html#prt3
  20. Wikipedia. (2019, May 8). Agricultural Science. Retrieved May 10, 2019, from: https://en.wikipedia.org/wiki/agricultural science
  21. Government of Canada. (2018, June 22). T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661. Retrieved March 20, 2019, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html#prt3
  22. Government of Canada. (2018, June 22). T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661. Retrieved March 20, 2019, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html#ppdx1
  23. Government of Canada. (2019, March 26). Income Tax Act. Retrieved April 9, 2019, from:

    https://laws-lois.justice.gc.ca/eng/acts/I-3.3/page-267.html?txthl=humanities#s-248

  24. Government of Canada. (2018, June 22). T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661. Retrieved March 20, 2019, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html#prt3
  25. Government of Canada. (2018, June 22). T4088 – Scientific Research and Experimental Development (SR&ED) Expenditures Claim – Guide to Form T661. Retrieved March 20, 2019, from https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html#prt3

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