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Home / SR&ED Blog / News / UNLOCKING SR&ED BENEFITS: QUALIFIED VS. ALLOWABLE EXPENDITURES EXPLAINED

UNLOCKING SR&ED BENEFITS: QUALIFIED VS. ALLOWABLE EXPENDITURES EXPLAINED

In the world of Scientific Research and Experimental Development (SR&ED) in Canada, understanding the difference between Qualified and Allowable Expenditures is key to maximizing your tax incentives. Let’s break it down for you:

 Qualified Expenditures

Qualified Expenditures encompass costs directly tied to eligible SR&ED activities, such as:

  • Salaries and Wages: Payments made to employees actively engaged in R&D.
  • Materials: Costs for substances, equipment, or materials directly used in research.
  • Contract Expenditures: Payments to third parties for SR&ED services.
  • Overhead: Indirect costs related to the project, like utilities and maintenance.

Allowable Expenditures

Allowable Expenditures are a subset of Qualified Expenditures eligible for claims:

  • Wages and Salaries: A portion of salaries for employees involved in both SR&ED and non-SR&ED tasks.
  • Materials: Only materials used in the SR&ED process can be claimed.
  • Overhead: Typically, 55% of overhead costs are claimable.
  • To maximize your SR&ED claim, meticulous documentation is essential. Partner with SRED Consultants for expert guidance, ensuring compliance with Canada Revenue Agency (CRA) guidelines.

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