SR&ED Capital Expenditures Aren't Just for Manufacturers
When most people think of SR&ED capital expenditure claims, they picture manufacturers writing off custom machinery or lab equipment. Software companies can claim SR&ED capex too, and with the CRA having recently reintroduced capital expenditures to the SR&ED program, this is becoming a real opportunity for tech companies doing serious R&D.
A Real Example
We recently helped a software company doing advanced AI research claim SR&ED capex for the specialized GPU hardware supporting their research. This equipment wasn't a nice-to-have; it was core infrastructure for the experimentation and model development driving their SR&ED work.
The claim was filed in June as part of their 2025 SR&ED submission, and it was accepted as filed. As far as we can tell, it's one of the first SR&ED capex claims in Canada since the CRA brought capital expenditures back into the program. That makes it a useful case study for other software companies wondering whether their hardware spend qualifies.
What You Need to Know Before You Claim SR&ED Capex
1. The equipment needs to be almost entirely dedicated to SR&ED. The CRA's ASA (all or substantially all) test means the equipment must be used more than 90% for SR&ED work. If commercial or non-SR&ED use exceeds 10%, you likely can't claim it as straight capex, though there may be a path through shared-use equipment rules. That's a more complex topic worth its own discussion, so reach out if that's your situation.
2. You have to track usage accurately, and as you go. The CRA will ask you to substantiate that the equipment was actually used on SR&ED. That means:
Keeping usage logs for the equipment (server logs, in the GPU example) throughout the year, not reconstructed after the fact
Assigning that usage to specific SR&ED projects
Which means you also need to identify your SR&ED projects before the year ends. You can't retroactively track usage against a project you haven't defined yet.
3. Converting the equipment later has consequences. If you later shift the equipment to commercial use, you may have to repay the SR&ED credits claimed against it. For something like GPUs, which depreciate quickly, this often ends up being a non-issue in practice but it's worth understanding going in.
Bottom Line
If you're a software company with significant hardware spend supporting your R&D (GPUs, specialized servers, or similar infrastructure) don't assume SR&ED capex is off the table just because you're not a manufacturer. The opportunity is real, but it comes with tracking obligations:
Know how to track equipment usage before you buy
Identify your SR&ED projects ahead of year-end so tracking is accurate from day one
Talk to someone who's done this before. The rules are new enough that getting it wrong is easy
If you think this might apply to your company, send us an email or DM to book a call.
