Provincial R&D Credits and Incentives 2025 — How to Maximize Scientific Research and Development Tax Refunds

In 2025, research and development (R&D) tax incentives remain one of the most valuable programs for Canadian innovators. Quebec offers the most generous refundable credits in the country—up to 30% on eligible wages—on top of federal SR&ED credits. However, CRA and Revenu Québec audits have become more stringent, focusing on project eligibility, documentation, and technical substantiation. Mackisen CPA Auditors Montreal helps businesses in technology, manufacturing, and life sciences claim every eligible dollar while defending their filings from CRA review.

Legal and Regulatory Framework

Income Tax Act (Canada) Section 37(1): Allows deduction of current and capital expenditures for scientific research and experimental development (SR&ED).
Regulation 2900: Defines qualifying SR&ED activities and eligible costs.
Taxation Act (Quebec) Sections 1029.8.36.26 to 1029.8.36.35: Outline Quebec’s refundable R&D credits for wages and subcontractor costs.
Excise Tax Act: Governs GST/HST on R&D expenditures.
SR&ED Program Policy 2025: CRA defines “systematic investigation” and technical uncertainty as key eligibility criteria.

Key Court Decisions

Northwest Hydraulic Consultants v. The Queen (1998): Established the five-part test for SR&ED eligibility, requiring technological uncertainty and systematic investigation.
Zeuter Development Corp. v. The Queen (2021): Denied claims lacking contemporaneous documentation.
LES Services Technologiques v. Quebec (2020): Revenu Québec confirmed payroll-based R&D credits require time-tracking and project substantiation.
Formadrain Inc. v. The Queen (2022): Reinforced that routine engineering and commercial product development do not qualify as SR&ED.

Why CRA and Revenu Québec Audit R&D Claims

Both agencies audit to ensure claims meet the definition of “scientific or technological advancement.” Common triggers include missing technical reports, subcontractor invoices, or time logs. Quebec also cross-checks payroll data against RL-1 slips. Mackisen mitigates risks by preparing defensible claims, technical narratives, and contemporaneous documentation that meet both CRA and Revenu Québec standards.

Mackisen’s Strategy

1. Eligibility Review — Identify eligible projects based on technological uncertainty and experimentation.

2. Technical Report Preparation — Draft CRA-compliant narratives describing hypotheses, testing, and results.

3. Cost Allocation — Segregate qualifying wages, materials, and overhead to maximize claim value.

4. Dual Claim Coordination — File both federal SR&ED and Quebec R&D credits simultaneously.

5. Audit Defense — Represent clients during CRA and Revenu Québec reviews, ensuring claims remain intact.

Real Client Experience

A Montreal AI startup recovered $850,000 in combined SR&ED and Quebec R&D credits with Mackisen’s documentation and audit defense. A manufacturing company previously denied credits by CRA regained full eligibility after Mackisen reconstructed time-tracking and payroll records.

Common Questions

Can I claim SR&ED and Quebec credits together? Yes, federal and provincial claims can be combined.
Do prototypes qualify? Only if technical uncertainty and systematic experimentation are proven.
What if I was denied before? Mackisen can reconstruct documentation and appeal CRA decisions.

Why Mackisen

Mackisen CPA Auditors Montreal are Canada’s SR&ED and R&D tax credit specialists. Our engineers, CPAs, and tax lawyers collaborate to maximize credits and defend claims. Call Mackisen CPA Auditors Montreal today for your 2025 R&D Consultation. The first meeting is free and includes a full eligibility review.