Can Cybersecurity Companies Claim SR&ED?

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Cybersecurity is a field defined by constantly shifting threats — which sounds like a natural fit for SR&ED, but eligibility still comes down to whether a specific project involves genuine technological uncertainty, not just the fact that security work is inherently adversarial.

Where Eligibility Commonly Shows Up

● Developing detection methods for novel attack patterns that existing signature or heuristic approaches can’t reliably identify

● Solving false-positive or false-negative rate problems that persist despite tuning known detection techniques

● Building systems to detect threats in encrypted or obfuscated traffic without existing published methods to rely on

● Architecting systems to maintain detection performance at scale or latency requirements existing tools don’t meet

Where It Usually Doesn’t Apply

● Deploying and configuring commercial security tools using vendor-documented settings

● Routine signature updates and rule tuning within an existing, working detection system

● Standard penetration testing and vulnerability scanning using established methodologies

● Compliance-driven security implementation following documented frameworks

A Field That Moves Fast — and Documents Slowly

Security teams often operate under time pressure that discourages documentation — responding to an active threat doesn’t leave much room for note-taking. But incident postmortems, detection-tuning logs, and threat research notes are frequently already being generated; the gap is usually in flagging which of them point to genuine experimental development rather than routine response.

About The Author

Dale Doering

Dale Doering is the owner of SRED Consultants Inc., helping businesses navigate the complexities of Scientific Research and Experimental Development (SR&ED) claims. With a strong understanding of the technical and interpretive requirements of the SR&ED program, Dale works with companies to identify eligible projects, document technological challenges, and clearly demonstrate the systematic experimentation or analysis undertaken to achieve advancement. His approach focuses on translating complex technical work into well-supported SR&ED claims, helping clients maximize eligible opportunities while maintaining a clear understanding of the program’s requirements.

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Frequently Asked Questions

Can cybersecurity projects qualify for SR&ED tax credits?

Yes, cybersecurity companies can claim SR&ED, but eligibility depends on whether a project addresses genuine technological uncertainty. The inherently adversarial nature of cybersecurity work alone does not automatically make a project eligible.

Qualifying activities generally involve creating new methods or solving persistent technical barriers where established solutions do not exist. Examples include:

– Developing detection methods for novel attack vectors that standard signature or heuristic tools miss.

– Resolving persistent false-positive or false-negative rate issues that tuning standard tools cannot fix.

– Designing detection capabilities for encrypted or obfuscated traffic without existing published methods.

– Architecting systems that meet extreme scale or low-latency requirements beyond the capability of existing tools.

Routine security operations and standard implementations generally do not qualify. Excluded activities include:

– Deploying and setting up commercial security software using standard vendor guidelines.

– Performing routine rule tuning and signature updates within an operational system.

– Conducting standard penetration tests or vulnerability scans using established frameworks.

– Implementing security controls strictly for compliance purposes based on documented standards.

Cybersecurity teams often work under severe time constraints, especially during incident responses, making real-time technical note-taking a low priority. As a result, documentation falls behind, making it harder to substantiate claims after the fact.

Instead of creating entirely new documentation from scratch, teams can use existing materials—such as incident postmortems, threat research notes, and detection-tuning logs. The key is identifying and flagging which of these existing records demonstrate experimental development rather than routine threat response.

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