AI for All Funding: Does SR&ED Cover Your AI Project?

Canada's AI for All strategy aims to lift business AI adoption from about 12 percent to 60 percent by 2034, and it names SR&ED among its levers. But SR&ED is a CRA tax credit for work that resolves genuine technological uncertainty, not for buying, configuring, or prompting an existing AI tool. Building a novel model with an uncertain outcome can qualify. Adopting AI that already works almost never does.

Last verified: 2026-06-18. Attainment is not affiliated with BDC or the Government of Canada.

Canada's national AI strategy, AI for All (ISED), aims to raise business AI adoption from about 12 percent today to 60 percent by 2034, and it names SR&ED among the levers meant to get there. So it is reasonable to ask whether SR&ED will fund your AI project. For most businesses, the honest answer is no, and knowing why before you spend on a claim saves you a rejected filing and points you to the lever that actually fits.

The reason is that the AI funding conversation blurs two very different things: building AI and using AI. SR&ED can support the first when real uncertainty exists. It almost never supports the second, which is what most small businesses are actually doing under AI for All. A KPMG survey released in November 2025 found 93 percent of Canadian companies use AI in some form but only 2 percent see a return, because most are adopting, not inventing. SR&ED is built for the inventing.

This is the honest read you will not get from a firm selling SR&ED claim preparation: where SR&ED sits in AI for All, what qualifies, what does not, and how to tell which side of the line your AI project sits on.

How does SR&ED fit into AI for All?

SR&ED is one of the levers AI for All names, a tax credit aimed at the businesses that build AI rather than buy it. The strategy names adoption levers like BDC LIFT financing and SR&ED. Alongside them, NRC IRAP funds developing AI into a product, and they are not interchangeable. The whole skill is matching the route to what you are actually doing, and SR&ED is the narrowest. It rewards resolving genuine technological uncertainty, which most AI adoption simply does not involve.

What is SR&ED, briefly?

SR&ED is the Scientific Research and Experimental Development tax incentive, Canada's largest federal program supporting business R&D, run by the CRA. According to the CRA, Canadian-controlled private corporations can earn a 35 percent refundable investment tax credit on qualifying R&D spend up to an expenditure limit, now 6 million dollars; other claimants earn a 15 percent non-refundable credit. The work must be done in Canada. Provincial credits exist separately and vary by province. Confirm your year, status, and province before relying on any figure.

The credit is generous. The eligibility bar is the hard part, and it is where most AI projects fall out.

Does my AI project qualify for SR&ED?

It qualifies only if it resolves genuine technological uncertainty through systematic experiment. The CRA test has three parts, all required: a scientific or technological advancement, a scientific or technological uncertainty, and a systematic investigation by experiment or analysis. The trigger is uncertainty. At the start of the project, it must be genuinely unknown whether the result can be achieved with existing knowledge.

That single word, uncertainty, decides almost every AI case. If the outcome was knowable using tools and techniques that already exist, there is no uncertainty to resolve, and there is no SR&ED claim. Most AI adoption fails here not because it lacks value, but because someone else already resolved the hard part.

What AI work does not qualify?

Routine AI adoption does not qualify, because the uncertainty was already solved by the tool's creators. That generally rules out:

Using ChatGPT or any existing AI assistant to produce output.
Calling an existing AI API, such as a model provider's endpoint.
Prompt engineering.
Integrating or configuring an off-the-shelf AI SaaS product.
Building a standard application with known frameworks and patterns.
Routine data collection, cleaning, or labelling.

None of these are lesser work, and several pay back beautifully. They are simply implementation, not research. The CRA funds the resolving of uncertainty, and there is no uncertainty in using a tool the way it was designed to be used.

What AI work can qualify?

AI work can qualify when you are developing something genuinely new and the outcome is uncertain. For example:

Developing a novel algorithm or model architecture where no known method achieves the result you need.
Overcoming a technical or performance limitation that has no known solution, through systematic experimentation.
Building a data or training method that itself requires resolving a real technological uncertainty.

In each case you must be able to show the uncertainty you faced, the experiments you ran, and the advancement you were after. If you can document those three, you may have a claim. If you cannot, you have implementation, however sophisticated it feels.

SR&ED, LIFT, or IRAP: which funding route fits?

For most AI projects, SR&ED is the wrong lever, and that is fine. The route that fits depends on whether you are building, adapting, or adopting.

If your AI work is	The funding route	Why
Resolving genuine technological uncertainty (novel model, no known solution)	SR&ED	Funds R&D that advances technology
Developing or adapting AI into your core product to grow	NRC IRAP	Funds innovation with a commercial path
Adopting an existing tool to fix an expensive workflow	BDC LIFT financing	Funds adoption, not R&D

The mistake is forcing an adoption project into an R&D claim because AI for All listed SR&ED. Decide what you are actually doing first, then match the lever. That ordering is the whole game.

How do I decide before spending on a claim?

Decide by pressure-testing the project, not the program. Before paying anyone to prepare an SR&ED claim, run your AI work through The Workflow Funding Test, the framework we apply at Attainment for deciding whether a workflow is worth adopting AI into and financing. It forces you to define the work in plain terms, which immediately shows whether you are inventing or implementing.

The Workflow Funding Test, four questions:

Cost: does the workflow eat measurable time or leak revenue every week?
Repetition: does it run often enough that fixing it compounds?
Result: can you define success in dollars or hours before choosing a tool?
Payback: does the return beat the cost to build and run it?

If the answer to your project is "we are adopting an existing tool to fix this workflow," that is a LIFT or IRAP conversation, not SR&ED. If it is "we have to invent something nobody has built because no known method works," you may be in SR&ED territory. The test sorts it in minutes.

Summary

Key takeaways

AI for All names SR&ED as a lever, but naming it does not make AI broadly eligible; SR&ED still funds R&D that resolves genuine technological uncertainty.
Using ChatGPT, calling an API, prompt engineering, and configuring off-the-shelf AI generally do not qualify.
Developing a novel model or algorithm with an uncertain outcome can qualify, if you can show the uncertainty, experiments, and advancement.
Per the CRA, the credit is 35 percent refundable for CCPCs up to a 6 million dollar limit, 15 percent non-refundable for others; provincial credits are separate.
Most AI adoption fits BDC LIFT (financing) or NRC IRAP (innovation), not SR&ED. Match the route to the work.

ProofKPMG: only 2 percent of Canadian companies see a return on generative AI, despite 93 percent adopting it

The first step

AI for All gives Canadian businesses real reasons to adopt AI, but SR&ED is not one of them for most. It is a reason to fund AI research, not AI adoption. The fastest way to waste money here is to force an implementation project into an R&D claim and pay for the rejection.

Before you spend on a claim, define the work plainly. Run your AI project through The Workflow Funding Test. If you are building something genuinely uncertain, explore SR&ED. If you are adopting a tool to fix a workflow, point your energy at LIFT or IRAP instead. The AI Funding and Workflow Fit Checker scores your workflow against the test.

Request Consultation. We review fit first, then confirm scope, timing, and paid diagnostic terms before any work begins. Attainment does not prepare SR&ED claims, arrange financing, or guarantee any outcome, and is not affiliated with the CRA, NRC, or BDC.

About the author

David Cyrus, MBA, is the founder of Attainment, a diagnostic-first growth and operating-systems firm. He holds an MBA in Digital Business Models from Macquarie University and a BSc in Human Biology and Psychology from the University of Toronto, and writes about how Canadian businesses turn AI adoption into systems that pay back.

Further reading: IRAP for AI under AI for All, is the BDC LIFT loan worth it, AI funding for Canadian business in 2026 compared, and the AI adoption funding guide for Canadian business.

Frequently asked questions

Is SR&ED part of Canada's AI for All strategy?

Yes. AI for All, Canada's national AI strategy from ISED, names SR&ED among the levers meant to lift business AI adoption from about 12 percent to 60 percent by 2034. But naming it as a lever does not make AI broadly eligible. SR&ED still only funds R&D that resolves genuine technological uncertainty.

Does using AI like ChatGPT qualify for SR&ED?

No. Using an existing AI tool, calling its API, or engineering prompts is routine implementation. The technological uncertainty was already resolved by the tool's creators, so there is nothing for SR&ED to fund. SR&ED supports resolving new uncertainty, not using technology that already works.

What AI work does qualify for SR&ED?

Developing a novel algorithm or model where the outcome is genuinely uncertain and you resolve it through systematic experiment. You must be able to show the uncertainty, the experiments, and the advancement. Building something new where no known method works can qualify; using something that exists cannot.

How much is the SR&ED credit worth?

Per the CRA, Canadian-controlled private corporations can earn a 35 percent refundable credit on qualifying spend up to a 6 million dollar expenditure limit; other claimants earn 15 percent non-refundable. The work must be done in Canada, and provincial credits are separate. Confirm current terms with the CRA.

If SR&ED does not fit my AI project, what else fits?

Other Canadian routes. If you are developing or adapting AI into your product, NRC IRAP may fit. If you are adopting an existing AI tool to fix an expensive workflow, BDC LIFT financing, which AI for All names, fits. Match the program to whether you are building or buying.