Canada SR&ED and contingency fees

1Summary

Canada's Scientific Research and Experimental Development (SR&ED) program gives businesses that do eligible research in Canada a deduction and an investment tax credit, earned at a basic rate of 15 percent and, for some corporations, at an enhanced rate of 35 percent.1 A claim is made on Form T661, which must be filed within 12 months of the filing due date of the income tax return.23

Many claims are prepared by outside advisers, and some of those advisers are paid a contingency fee.4 The CRA's form defines that arrangement as one "where the fee is based on a percentage of the investment tax credit earned".3 In 2012 the federal government consulted on the practice. Its consultation paper set out concerns about compliance costs and about an incentive to take aggressive positions, and it also set out possible benefits.4 The measure that followed, announced in Budget 2013, was a disclosure rule. Since 2014 every claim has had to identify each paid claim preparer and report the billing arrangement, the rate and the fee, with a 1,000 dollar penalty for missing or inaccurate information.567

This paper describes those rules, the penalties that apply to claimants and preparers, the guidance the CRA gives businesses, and the case made for contingency fees. It describes the facts only. It makes no recommendation for Canada. It finds that the official record contains no cap or ban, no published findings from the 2012 study, and no published statistics on how claims are billed.

2The SR&ED claim

2.1What the incentives provide

The CRA describes the SR&ED tax incentives as a deduction against income for allowable SR&ED expenditures and an investment tax credit (ITC) that reduces income tax payable.1 The ITC is earned at a basic rate of 15 percent, and some corporations may claim it at an enhanced rate of 35 percent.1 For Canadian-controlled private corporations within the expenditure limit, credits earned at the enhanced rate can be refunded in cash, which the Department of Finance described in 2012 as generally fully refundable for small and medium-sized corporations on their first 3 million dollars of current expenditures.4

2.2How a claim is made

Subsection 37(11) of the Income Tax Act requires a taxpayer to file a prescribed form for any SR&ED expenditure it deducts, on or before the day that is 12 months after its filing due date for the year. The form must contain prescribed information about the expenditure and "claim preparer information".2 The consequences of not doing so are strict. If the prescribed information about an expenditure is missing from the form, no amount for that expenditure may be deducted.2 If the form is not filed in accordance with subsection 37(11), the expenditure is deemed not to be an SR&ED expenditure.2

The prescribed form is Form T661. Its current version, T661 E (26), has ten parts, including project descriptions, the calculation of expenditures, a claim checklist, the claim preparer information in Part 9 and a certification in Part 10.3 In Part 10 the claimant certifies that it has examined the information on the form and attachments and that "it is true, correct, and complete".3

2.3Where judgment enters

An SR&ED claim requires judgments about which work is eligible and which costs relate to it. The Department of Finance's 2012 consultation paper described eligible work as systematic investigation or research carried out in a field of science or technology by means of experiment or analysis, in three broad categories: basic research, applied research and experimental development.4 The CRA's 2023 guidance to claimants listed common errors that include ineligible expenditures, a lack of information on scientific or technological advancement, and undisclosed financial assistance.8 Each of these affects the size of the credit.

3How contingency fees operate in SR&ED

3.1The definition used by the CRA

Form T661 lists five billing arrangement codes. Code 1 is a "Contingency fee arrangement", described as one "where the fee is based on a percentage of the investment tax credit earned". The other codes are an hourly rate, a daily rate, a flat fee arrangement (lump sum) and other arrangements.3

The Department of Finance's 2012 consultation paper gave a broader description. It said a contingency fee "is a charge for services that is only payable if there is a result favourable to the client, and is generally calculated as a percentage of the amount of the SR&ED tax credits the client receives".4

3.2The forms a contingency fee takes

The CRA's guide to Form T661 shows that contingency fees need not be a single flat percentage. It tells claimants to list a preparer on several lines where the preparer "used a contingency fee arrangement with a variable rate (increasing or decreasing)".9 Its worked example describes a preparer paid 15.5 percent on the first 10,000 dollars of ITC earned and 6 percent on the next 5,000 dollars, with each rate reported on its own line under code 1.9 The guide also uses 15.5 percent as an example of a billing rate entered on line 955.9 These figures are the CRA's examples. They are not statistics about fees actually charged.

Because a fee calculated on the ITC may not be settled when the claim is filed, line 965 asks for the "Total fee paid, payable or expected to pay".39

The arithmetic of such a fee is simple. As an illustration only, on an ITC of 100,000 dollars a fee of 20 percent would be 20,000 dollars; if the same work were claimed at 150,000 dollars, the same percentage would produce 30,000 dollars. The fee moves with the credit.

3.3How common contingency fees are

The official record says more about the use of outside preparers than about how they are paid. The 2012 consultation paper stated that analysis from two surveys showed "about two-thirds of businesses rely on third parties to prepare their SR&ED claims", and that tax data from 2009 showed 65 percent of small and medium-sized firms and 63 percent of large firms used external assistance.4

On fees, the consultation paper stated that "It has been reported that these fees are relatively high, and may represent 30 per cent or more of the total SR&ED benefit received by these firms."4 The paper did not identify the source of that report, and it presented the point as reported, not measured. No later official figure on the prevalence or size of contingency fees in SR&ED claims was identified for this paper.

4The 2012 study

4.1Why the government consulted

Budget 2012 announced a study of contingency fees. The CRA's summary of the budget's SR&ED measures states that the study was "to better understand the practice of businesses hiring consultants on a contingency-fee basis to prepare their SR&ED claims, and to determine whether any action is required".10 On 2 August 2012 the Minister of Finance and the Minister of National Revenue launched the consultation, with comments invited until 1 October 2012.11

The news release listed five questions: why firms hire third-party tax preparers on a contingency-fee basis; why those preparers charge contingency fees; the prevalence of the practice; the amounts charged; and the impacts of the practice on the effectiveness of the program.11

4.2The concerns the paper set out

The consultation paper said the government had "increasingly heard concerns about this practice from various stakeholders, including in relation to the prevalence and magnitude of these fees", and that Budget 2012 announced the study "on the basis that the Government is concerned that contingency fees may be diminishing the benefits of the SR&ED tax incentive program to Canadian businesses and the economy".4

It identified two main concerns.

Compliance cost. High contingency fees may increase compliance costs for successful claimants, most likely for firms whose claims are above a threshold at which a contingency fee would exceed what they would pay under an hourly or flat fee. Higher compliance costs mean a lower share of the incentive reaches the firm doing the research.4
Claim positions. The paper said that because the fee is related to the size and result of the claim, "this billing practice has been criticized on the basis that it provides an incentive for tax preparers to encourage their clients to take aggressive positions that push the bounds of the law and its interpretation". It added: "If true, this practice would increase the costs for the Canada Revenue Agency to administer the SR&ED tax incentive program, in addition to increasing the overall fiscal risks associated with the SR&ED tax incentive program."4

The paper framed the second point as a criticism to be tested, not as a finding. It also stated that the government "is generally concerned about all types of billing arrangements that result in high compliance costs for taxpayers", not only contingency fees.4

4.3The benefits the paper set out

The consultation paper also recorded ways in which contingency fees may improve the program. It said that marketing by third-party preparers "could contribute to a more widespread knowledge of the SR&ED program", and that preparers "may undertake claims for businesses that do not have the internal expertise or resources to prepare an SR&ED claim and that would not have done so otherwise". It invited views on these potentially positive effects, "including an increased awareness of the SR&ED program and greater accessibility".4

4.4The comparisons it drew

The consultation paper stated that "There are currently no restrictions in Canada regarding the use of contingency fees to prepare SR&ED claims."4 It described other Canadian rules for comparison:

Rule described in the 2012 paper	What the paper said
Tax Rebate Discounting Act	Limits the discount a tax discounter may charge for buying a right to a refund, but would typically not apply to SR&ED claim preparers because they do not acquire a right to a refund.4
Lobbying Act	Since 2008, prohibits payments to consultant lobbyists that are contingent on the outcome of their lobbying activities.412
Ontario Solicitors Act	Permits contingency fee agreements for solicitors in some circumstances, with a required statement that, among other things, explains how the fee is determined using a simple example.4
Professional codes	The rules of professional conduct for members of the Canadian Institute of Chartered Accountants allowed contingency fees provided the arrangement did not impair professional judgment or objectivity and the client agreed to it in writing.4

It also described foreign rules: the United States restriction on contingent fees for matters before the IRS, including preparing returns and refund claims, with exceptions for examinations, interest and penalty reviews and judicial proceedings; and the registration of tax preparers in Japan.4

The paper asked whether any of these approaches "could or should be considered" for SR&ED claims, and whether other actions could limit the use of contingency fees, "for example through further initiatives by the CRA to assist firms in completing their claims, or through other forms of disincentives".4

4.5What became of the study

No published report of the consultation's findings was identified for this paper. The consultation page stated that submissions would be posted on the Department of Finance website only with the submitter's permission.4 The government's next published step was the Budget 2013 measure described below.

5The 2013 response: disclosure, not restriction

5.1The budget measure

Budget 2013 introduced measures to give the CRA "new resources and administrative tools to better respond to the minority of Scientific Research and Experimental Development (SR&ED) program tax preparers and SR&ED performers who participate in claims where the risk of non-compliance is perceived to be high and eligibility for the SR&ED program unlikely".5

One measure required more detailed information on claim forms. Where third parties assisted with a claim, the business number of each would be required, "along with details about the billing arrangements including whether contingency fees were used and the amount of the fees payable". Where no third party was involved, the claimant would certify that. The budget stated that "This information will facilitate the identification of SR&ED program claims with a higher risk of non-compliance."5

To support the requirement, the budget proposed a penalty of 1,000 dollars for each claim with missing, incomplete or inaccurate information about preparers and billing arrangements, with the claimant and the preparer jointly and severally, or solidarily, liable where a third-party preparer was engaged.5 The CRA states that the measure received Royal Assent on 12 December 2013 and applies to claims filed on or after 1 January 2014.6

The measure required information about fees. It did not cap their amount, prohibit any type of fee or require any fee to be refunded if a claim is reduced.57 No federal provision restricting contingency fees for SR&ED claims was identified for this paper.

5.2The statutory rule

Paragraph 37(11)(b) of the Income Tax Act requires the SR&ED form to contain claim preparer information as defined in subsection 162(5.3).2 Subsection 162(5.3) defines:

a claim preparer as "a person or partnership who agrees to accept consideration to prepare, or assist in the preparation of, the form", other than an employee acting in the course of employment;7
claim preparer information as prescribed information about the identity of the claim preparer, if any, and "the arrangement under which the claim preparer agrees to accept consideration in respect of the preparation of the form".7

The definition of a claim preparer does not depend on membership of a professional body or on any registration. It turns only on accepting consideration to prepare or assist with the form.7

5.3What Part 9 asks for

Part 9 of Form T661 must be completed for each claim preparer that has accepted consideration to prepare or assist in preparing the claim.39 It asks:

Line	Information
935	Whether a claim preparer was engaged in any aspect of the preparation of the claim.3
940	Name of each claim preparer, on several lines for a mixed or variable rate arrangement.39
945	The preparer's business number, or for an individual a GST or HST number.9
950	Billing arrangement code (1 contingency fee, 2 hourly, 3 daily, 4 flat fee, 5 other).3
955	Billing rate: percentage, hourly or daily rate, or flat fee.3
960	Description of any other arrangement, in 10 words or less.3
965	Total fee paid, payable or expected to pay.3
970 and 975	Name, signature and date of the person certifying that the information is complete and accurate.39

The form warns that a 1,000 dollar penalty may be assessed if this information "is missing, incomplete, or inaccurate", and that where a claim preparer has prepared or assisted with the form, the claimant and the preparer are jointly and severally, or solidarily, liable.3

In May 2014 the CRA introduced an administrative measure for claim preparers with confidentiality concerns. A claimant could leave the billing lines 950 to 965 blank on the T661 filed with the return, and at the same time send a paper copy of Parts 1 and 9, with those lines completed, directly to the tax center.13

5.4What the disclosure does and does not do

Part 9 tells the CRA who prepared a claim and how they were paid.3 Budget 2013 stated its purpose as identifying claims with a higher risk of non-compliance.5 The disclosure is made to the CRA, not to the public. No CRA publication was identified that reports how billing information is used in selecting claims for review, or that publishes statistics drawn from it.

6Who bears the consequences

6.1The claimant

When the CRA reviews a claim, a lack of supporting information "could result in the partial or full disallowance of your claim".14 A claim selected for review cannot be withdrawn, because Form T661 is part of the income tax return and the Part 10 certification "cannot be revoked".14

The CRA places responsibility on the claimant even where a preparer is used. Its review guide states that a claimant may choose a representative, but "You are still legally responsible for your claim, even if you choose to have someone act for you."14 Its 2022 advisory stated that "all claimants are legally responsible for the accuracy of the information in their claims", that it is the claimant's responsibility to verify information submitted on its behalf, and that "You will be held liable for any false information, and may face serious consequences."15 Its 2023 guidance repeated that the claimant must verify information submitted by a third party.8

If a false statement or omission is made knowingly or under circumstances amounting to gross negligence, subsection 163(2) of the Income Tax Act imposes a penalty of the greater of 100 dollars and 50 percent of the amounts listed in the subsection.16 Those amounts include the excess of a refundable ITC that would be deemed paid under subsection 127.1(1), calculated on the information in the return or form, over the amount actually deemed paid.16 This penalty is calculated on the overstated amount. It falls on the person who made or participated in the false statement.16

6.2The claim preparer

A claim preparer faces three separate rules.

The claim preparer information penalty. Under subsection 162(5.1), every person who makes, participates in, assents to or acquiesces in a false statement or omission in the claim preparer information is jointly and severally, or solidarily, liable "together with any claim preparer of the form" to a penalty of 1,000 dollars.7 A claim preparer is not liable if it exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances.7 The subsection states that defence for the claim preparer only.7
The third-party civil penalty. Section 163.2 imposes a penalty on a person who makes, or participates in, a statement to another person that the person knows, or would reasonably be expected to know but for circumstances amounting to culpable conduct, is false and could be used for a purpose of the Act.17 The penalty is the greater of 1,000 dollars and the lesser of the penalty the other person would face under subsection 163(2) and the total of 100,000 dollars and the person's "gross compensation".17 Gross compensation includes all amounts to which the person is entitled "either absolutely or contingently" in respect of the statement.17 An adviser is not treated as acting with culpable conduct solely because it relied in good faith on information provided by the client.17
Professional rules, where the preparer belongs to a professional body (see below).

No CRA material or court decision applying section 163.2 to an SR&ED claim was identified for this paper.

6.3The fee

The Income Tax Act requires the fee to be disclosed. No provision identified for this paper requires a contingency fee to be refunded when a claim is reduced.27 Whether any part of the fee is returned depends on the contract between the claimant and the preparer. The CRA has advised readers of one of its SR&ED news items to make sure they understand the terms of the fees listed in a contract and any termination clauses.18

The result is an asymmetry that follows from the rules, not from the conduct of any adviser. The disallowed credit and any gross negligence penalty fall on the claimant, which certified the claim.1614 The preparer's fee, if calculated on the ITC earned, may be settled on the credit as filed or as finally allowed, depending on the contract.

7Professional rules

Some claim preparers are members of professional bodies. The CPA Code of Professional Conduct published by CPA Ontario prohibits a member or firm in public accounting from performing a service for a contingent fee where the service is an engagement requiring independence, a compilation engagement, or the "preparation of an income tax return".19 For other services, it permits a contingent fee if the client has agreed in writing to the basis for the fee before the engagement is substantially complete, and the arrangement does not impair objectivity on an engagement requiring it or influence the result of a compilation or an income tax return prepared for the same client.19

The code does not mention SR&ED claims, and whether preparing Form T661 is the preparation of an income tax return for this purpose is not addressed in its text.19 A companion paper in this series, Provincial CPA rules on contingent fees, sets out the provincial codes in detail. A professional code binds only its members, while the statutory definition of a claim preparer reaches anyone paid to prepare the form.719

8What the CRA tells businesses

The CRA's published guidance does not tell businesses whether to use a contingency fee. It addresses the use of preparers in general.

Unsolicited offers. In 2022 the CRA said it had "observed a recent increase in SR&ED claims containing false and/or non-compliant information", and advised businesses to be cautious of unsolicited offers to help them claim, to check eligibility using its own tools, to be wary of anyone who tries to convince them to file a claim when they are not actively doing R&D, and never to sign a blank form.15
Choosing a preparer. In 2023 the CRA advised businesses to select a preparer knowledgeable about SR&ED eligibility, to ask the preparer to include them in conversations with the CRA, and to provide the Part 9 information for each preparer. It said: "Be leery of any preparer who asks you to omit this information from your claim."8
Practice for preparers. The same guidance recommended that preparers ensure their clients and key employees attend review meetings, because they can explain costs and how the work achieved scientific or technological advancement.8
Free alternatives. The 2022 advisory pointed businesses to the CRA's self-assessment and learning tool and to free telephone consultations with an SR&ED specialist.15

8.1Pre-claim approval

From 1 April 2026 the CRA has offered an optional pre-claim approval process, announced in Budget 2025, which lets eligible small and medium businesses obtain a determination on whether planned projects qualify before work starts or costs are incurred.202122 The CRA says the application can be completed in less than a day using existing documentation, that a determination is given within eight weeks, and that claims with only pre-approved projects that need an expenditure review are processed in 90 days rather than 180.2021 There is no appeal from a determination, and a business that is refused can still file a regular claim.20

In its report on consultations held in 2025 and 2026, the CRA recorded that many businesses were not using its self-assessment tool or pre-claim workbook, and that some were unaware of them "while others preferred to use a claim preparer or in-house process".23 The report does not mention contingency fees.23

9The case made for contingency fees

The arguments for contingency fees deserve to be stated in their strongest form, and the 2012 consultation paper itself recorded several of them.4

Awareness. The consultation paper said marketing by third-party preparers could spread knowledge of the program.4 A preparer paid from the credit has a reason to find businesses that do eligible work but do not know it.

Access. The paper said preparers may take on claims for businesses without the internal expertise or resources to prepare a claim, which would not otherwise have claimed.4 A contingency fee lets such a business claim without an upfront cost.

Risk sharing. Under a contingency fee, the preparer bears the cost of work that produces no credit. A business that is unsure whether its work qualifies pays only if a credit results.

Cash flow. For a small business that receives a refundable ITC, a fee paid out of the refund matches the cost to the benefit.

Disclosure already applies. Since 2014 the CRA has known, for every claim, whether a contingency fee was used and at what rate.36 Supporters can argue that this lets the CRA direct reviews where it sees risk without restricting how businesses choose to pay.

These are real advantages to real businesses. Nothing in this paper suggests that preparers who charge contingency fees act improperly.

The 2012 paper also recorded the other side: that a fee related to the size and result of a claim has been criticized as an incentive to take aggressive positions, and that high fees can reduce the share of the incentive that reaches the business doing the research.4 The record does not contain a published government conclusion weighing these points against each other.

10What the record shows

The official record supports the following points.

The federal government has treated contingency fees for SR&ED claims as a matter of policy concern. It consulted on them in 2012, citing compliance costs and the criticism that such fees provide an incentive to take aggressive positions, and it also recorded possible benefits for awareness and access.411
The measure adopted in Budget 2013 was disclosure. Each claim must identify every paid claim preparer and report the billing arrangement, rate and fee, with a 1,000 dollar penalty for which claimant and preparer are jointly liable.57
The stated purpose of that disclosure was to identify claims with a higher risk of non-compliance.5
No cap or prohibition on contingency fees for SR&ED claims was identified in federal law or CRA guidance.47
The CRA places legal responsibility for the content of a claim on the claimant, whoever prepared it.1415
The third-party penalty in section 163.2 is measured in part by the preparer's gross compensation, including contingent entitlements.17

The record does not show:

what the 2012 consultation found;
how many SR&ED claims are prepared on a contingency fee, or at what rates, although the CRA has collected that information on every claim since 2014;
whether claims prepared on a contingency fee are adjusted more or less often on review than other claims.

These gaps are not a finding either way. They mean that the effect of contingency fees on SR&ED claims has not been measured in any published official source identified for this paper.

References

Canada Revenue Agency, What are SR&ED tax incentives, sections on the deduction, the investment tax credit and pre-claim approval. https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/what-are-sred-tax-incentives.html (accessed 11 October 2026). Back
Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), subsections 37(11), (11.1) and (12) (current to 21 September 2026). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-37.html (accessed 11 October 2026). Back
Canada Revenue Agency, Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, T661 E (26), page 1, Part 9, Claim preparer information (lines 935 to 975 and billing arrangement codes) and Part 10, Certification. https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t661/t661-26e.pdf (accessed 11 October 2026). Back
Department of Finance Canada, Consultation Regarding the Impact of Contingency Fees on the Effectiveness of the Scientific Research and Experimental Development Tax Incentive Program (2012), sections "Description of the SR&ED Tax Incentive Program", "Use of Third Parties to Prepare SR&ED Claims", "Examples of Restrictions in Canada and Other Countries" and Table 1. Archived copy of the Department of Finance page captured 7 May 2013. https://web.archive.org/web/20130507033404/http://www.fin.gc.ca/activty/consult/sred-rsde-eng.asp (accessed 11 October 2026). Back
Department of Finance Canada, Economic Action Plan 2013 (Budget 2013), Annex 2, Tax Measures: Supplementary Information, section "Scientific Research and Experimental Development Program". Archived copy of the budget page captured 20 December 2013. https://web.archive.org/web/20131220170359/http://www.budget.gc.ca/2013/doc/plan/anx2-eng.html (accessed 11 October 2026). Back
Canada Revenue Agency, Budget 2013, Scientific Research and Experimental Development (SR&ED) Tax Incentive Program, section on claim preparer information and penalty. https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/budget-2013/budget-2013-scientific-research-experimental-development-tax-incentive-program.html (accessed 11 October 2026). Back
Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), subsections 162(5.1), (5.2) and (5.3) (current to 21 September 2026). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-162.html (accessed 11 October 2026). Back
Canada Revenue Agency, Are you preparing to claim SR&ED tax incentives? Here's what you need to know (tax tip, 30 May 2023). https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2023/preparing-to-claim-sred-tax-incentives-what-you-need-to-know.html (accessed 11 October 2026). Back
Canada Revenue Agency, T4088, Guide to Form T661 (T4088(E) Rev. 20), Part 9, Claim preparer information, lines 935 to 975 and example. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4088/guide-form-t661-scientific-research-experimental-development-expenditures-claim-guide-form-t661.html (accessed 11 October 2026). Back
Canada Revenue Agency, Archived: Budget 2012, Scientific Research and Experimental Development (SR&ED) program, question 9. https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/archived-budget-2012/archived-budget-2012-scientific-research-experimental-development-program.html (accessed 11 October 2026). Back
Department of Finance Canada, Harper Government Launches Consultations on Contingency Fees for the SR&ED Tax Incentive Program, News Release 2012-086, 2 August 2012. https://www.canada.ca/en/news/archive/2012/08/harper-government-launches-consultations-contingency-fees-sr-ed-tax-incentive-program.html (accessed 11 October 2026). Back
Government of Canada, Lobbying Act, RSC 1985, c 44 (4th Supp), section 10.1. https://laws-lois.justice.gc.ca/eng/acts/L-12.4/page-2.html (accessed 11 October 2026). Back
Canada Revenue Agency, SR&ED T661 Claim Form, Revised optional filing measure for Part 9 (29 May 2014). https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/whats-new-program/t661-claim-form-revised-optional-filing-measure-part-9.html (accessed 11 October 2026). Back
Canada Revenue Agency, The SR&ED Review Process: A Guide for Claimants, sections "Can you withdraw your claim after it has been selected for review" and Appendix A, "Right to be represented" and "What are your responsibilities". https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/technical-review-a-guide-claimants.html (accessed 11 October 2026). Back
Canada Revenue Agency, Advisory for businesses claiming SR&ED investment tax credits (tax tip, 12 October 2022). https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2022/advisory-businesses-claiming-sred-investment-tax-credits.html (accessed 11 October 2026). Back
Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), subsection 163(2), including paragraph (d). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-163.html (accessed 11 October 2026). Back
Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), section 163.2, subsection (1) definitions of "culpable conduct" and "gross compensation", and subsections (4), (5) and (6). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-163.2.html (accessed 11 October 2026). Back
Canada Revenue Agency, SR&ED news and updates, item "Dentistry professionals: look out for third parties promising access to SR&ED tax incentives". https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/sred-updates.html (accessed 11 October 2026). Back
Chartered Professional Accountants of Ontario, CPA Code of Professional Conduct, Rule 215, Contingent fees (Rules 215.1 and 215.2 and Guidance). https://assets.cpaontario.ca/members/regulations-guidance/pdfs/CPA-Ontario-Code-of-professional-conduct.pdf (accessed 11 October 2026). Back
Canada Revenue Agency, SR&ED Pre-claim approval (information sheet, Cat. Rv4-224/2026E-PD). https://www.canada.ca/content/dam/cra-arc/serv-info/sred/pca-is-en.pdf (accessed 11 October 2026). Back
Canada Revenue Agency, Innovate with confidence: CRA's SR&ED Tax Incentive Program launches a new Pre-claim approval process (tax tip, 8 April 2026). https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2026/innovate-confidence-cra-sred-tax-incentive-program-pre-claim-approval-process.html (accessed 11 October 2026). Back
Department of Finance Canada, Budget 2025, Chapter 1, section "Enhancing the Scientific Research and Experimental Development Tax Incentives". https://budget.canada.ca/2025/report-rapport/chap1-en.html (accessed 11 October 2026). Back
Canada Revenue Agency, Consultation on proposed enhancements to the Scientific Research and Experimental Development (SR&ED) Program, Phase 2 findings. https://www.canada.ca/en/revenue-agency/corporate/about-canada-revenue-agency-cra/transparency-proactive-disclosure-canada-revenue-agency/consultations-engagement-canada-revenue-agency/consultation-on-proposed-enhancements-to-sred-program.html (accessed 11 October 2026). Back

Cite this paper

Summary

1Summary

2The SR&ED claim

2.1What the incentives provide

2.2How a claim is made

2.3Where judgment enters

3How contingency fees operate in SR&ED

3.1The definition used by the CRA

3.2The forms a contingency fee takes

3.3How common contingency fees are

4The 2012 study

4.1Why the government consulted

4.2The concerns the paper set out

4.3The benefits the paper set out

4.4The comparisons it drew

4.5What became of the study

5The 2013 response: disclosure, not restriction

5.1The budget measure

5.2The statutory rule

5.3What Part 9 asks for

5.4What the disclosure does and does not do

6Who bears the consequences

6.1The claimant

6.2The claim preparer

6.3The fee

7Professional rules

8What the CRA tells businesses

8.1Pre-claim approval

9The case made for contingency fees

10What the record shows

References

About this paper

Cite this paper

Summary

1Summary

2The SR&ED claim

2.1What the incentives provide

2.2How a claim is made

2.3Where judgment enters

3How contingency fees operate in SR&ED

3.1The definition used by the CRA

3.2The forms a contingency fee takes

3.3How common contingency fees are

4The 2012 study

4.1Why the government consulted

4.2The concerns the paper set out

4.3The benefits the paper set out

4.4The comparisons it drew

4.5What became of the study

5The 2013 response: disclosure, not restriction

5.1The budget measure

5.2The statutory rule

5.3What Part 9 asks for

5.4What the disclosure does and does not do

6Who bears the consequences

6.1The claimant

6.2The claim preparer

6.3The fee

7Professional rules

8What the CRA tells businesses

8.1Pre-claim approval

9The case made for contingency fees

10What the record shows

References

About this paper

Related papers