Is your medical or dental research eligible for SR&ED tax credits?

What types of dental research are eligible?

Dental research also needs to meet the how requirement and the why requirement to qualify for SR&ED tax credits.

To meet the how requirement, your dental research must involve a systematic investigation or search carried out in a field of science or technology by means of experimentation and analysis. This means that your dental research must be performed in a structured, methodical manner consistent with the scientific method. This includes formulating hypotheses, defining an experimental plan and testing methodology, and evaluating the results and forming conclusions. Trial and error approaches are not eligible.

The work must be conducted for the advancement of scientific knowledge or for the purpose of achieving technological advancement to meet the why requirement. This means that the work must address a gap in scientific knowledge or available technology and must be intended to result in new scientific insights or progress toward developing new or improved technology. This includes routine data collection and monitoring.

These five questions can help you assess whether your dental research is eligible under the SR&ED program:

1. Was there a scientific or technological uncertainty?
2. Did the effort involve formulating hypotheses specifically aimed at reducing or eliminating that uncertainty?
3. Was the overall approach adopted consistent with a systematic investigation or search, including formulating and testing the hypotheses by means of experiment or analysis?
4. Was the overall approach undertaken for the purpose of achieving a scientific or technological advancement?
5. Were detailed records of the work performed, including time spent, documented as the work progressed?

If you answered yes to these five questions you may be eligible to receive SR&ED tax credits for your dental research. Examples of previously claimed eligible research projects include:

• Investigator-initiated clinical trials
• Improving time between implant placement and restoration
• Developing and testing new materials
• Experimenting with biocompatibility of new materials
• Decreasing inflammation, pain, and healing time
• Developing new bridge designs
• Experimentation with non-standard materials
• Investigating oral diseases, such as risk factors or disease pathogenesis, and their treatments
• Development of diagnostic tools
• Development of surgical approaches or techniques
• Developing new methods of imaging analysis
• Manufacturing customized dental devices or tools with non-standard materials

Types of dental research and development that are not eligible for tax credits under the SR&ED program include:

• Pharma-initiated clinical trials
• Dental education
• Social determinants of health, social sciences, psychology, or humanities
• Gender studies
• Economic studies
• Systematic or narrative reviews of the current state of your field of specialty
• Adherence or compliance studies of a commercially available dental or therapeutic device
• Case reports or series
• Policy studies
• Post-market surveillance of a commercial device or treatment
• Dissemination of research to the lay public

How to apply for the SR&ED program

The next step after determining whether your research is eligible to receive SR&ED tax credits is to submit a claim to the CRA. This is a four-step process that includes:

1. Project scope — This involves identifying which of your projects are eligible for the SR&ED program and the costs associated with that research, such as materials, contractors, or overhead.
2. Technical documentation — This includes the hypothesis and methodology of the research as well as what advancements your practice has made during the fiscal year.
3. Submitting the applications — This step requires you to work alongside an accountant to document the costs associated with the research and file the application to the CRA.
4. CRA assessment — The CRA will assess your application to determine whether it meets the requirements for the SR&ED program and issue a tax credit if you are eligible.

Professionals may encounter obstacles when applying for the SR&ED program. While practices have been eligible to incorporate since 2011, many professionals have not incorporated their practice — making their research ineligible for the SR&ED program. Additionally, your practice may not be eligible under the program if you pay yourself in dividends instead of a salary.

It can also be challenging to document your progress on your research or track time for your employees, contractors, or consultants. A third-party advisor can support you through the documentation and application process to help you spend more time focusing on your research.

How the SR&ED program can benefit your practice

The SR&ED program is a valuable opportunity for professionals to receive reimbursement for innovative research and development. Our advisors work with professionals to help them navigate the application process — and have shared two examples of how claiming SR&ED tax credits can benefit both you and your practice.

A clinician scientist spent more than 20 years investigating bleeding disorders before they discovered their research may be eligible for the SR&ED program. Our advisors met with the clinician, identified potential research projects that they could claim for two eligible fiscal years, and helped the clinician prepare the claim. We also helped the clinician prepare for their first meeting with the CRA as a first-time claimant. The clinician received more than $90,000 per year in investment tax credits to compensate for their innovative research in the field.

In another case, a clinician-investigator recently completed graduate school and a fellowship. They wanted to determine if incorporating and claiming SR&ED would be a good fit for their practice and met with our advisors to gain insights into the process. We identified that their applied research projects in palliative medicine would be eligible for SR&ED tax credits and helped prepare the claim. The clinician-investigator received more than $80,000 in SR&ED tax credits in their first year of filing.  

Neha Tiku
SR&ED Leader, Ontario Region
416.515.3834 [email protected]

Andrea Granados, PhD
Senior Manager, Scientific Research and Development – Life Sciences
416.596.1711 [email protected]