How to claim SR&ED credits on an AI development project

Canada's Scientific Research & Experimental Development (SR&ED) program can refund up to 35% of qualifying R&D spend, but only if the project is scoped and documented the right way from day one. Here's how to set an AI build up to actually collect.

1. Scope the project around technical uncertainty

SR&ED rewards work that resolves genuine technical uncertainty — not routine integration. When scoping an AI initiative, isolate the parts where the outcome is not knowable in advance: novel retrieval strategies, evaluation methods for a new domain, agent orchestration patterns. Those are the hours that qualify.

2. Set up time tracking before you write code

CRA wants contemporaneous records. Before kickoff, agree on a tagging convention in your project tracker so each ticket, PR, and experiment maps to a specific technical uncertainty. Retrofitting timesheets after the fiscal year rarely survives review.

3. Capture the experiments, not just the wins

Failed prompts, discarded architectures, and eval runs that missed the bar are all evidence of systematic investigation. Keep a lightweight lab notebook — commit messages and eval reports count — that shows hypothesis, method, and result.

4. Structure the contract so eligible work is billable

If you're outsourcing to a Canadian partner, the claimant is usually the party bearing the technical and financial risk. Work with a tax advisor early to decide who claims what, and make sure the statement of work distinguishes eligible R&D from routine implementation.

5. File within 18 months

SR&ED claims must be filed within 18 months of the tax year-end. Miss it and the refund is gone, no matter how strong the technical case. Book the filing date into the project plan the same day you sign the SOW.

Done well, SR&ED can materially lower the net cost of an enterprise AI build. If you want help scoping an AI project with claim eligibility in mind, connect with Silverberry or explore our AI Consulting Services.