10 R&D Tax Credit Examples: Real-World Use Cases for Maximum Savings

A study found that every $1 in R&D tax credit leads to about $4 in long-term research investment. That’s not just a nice tax break, it’s fuel for innovation. 

The problem? 

Most businesses don’t even realize the work they’re already doing could qualify. Chances are, if your team’s deep in development or testing, you’re already doing the kind of work the R&D credit was made for. 

The 10 real-world examples in this article show exactly how eligible businesses across industries turned everyday R&D into serious savings, and how you can do the same.

What Is R&D? What Qualifies As R&D?

R&D stands for research and development. It’s the behind-the-scenes work businesses do to create new products, improve existing ones, or solve tricky technical problems. Whether it’s a software company refining its code or a manufacturer experimenting with better materials, R&D is all about pushing ideas forward and finding smarter ways to work.

And here’s the good news. Those efforts might qualify for the R&D tax credit in regions like the USA and Canada (SR&ED), which can mean serious savings if you know how to spot them. 

However, claiming the maximum R&D tax credits isn’t that simple. You need to show your work clearly, including: 

• Every technical challenge, iteration, and improvement
• Failed attempt
• Testing phase
• Time tracked
• Team involved and more. 

That’s where Chrono steps in.

It tracks project timelines, R&D budget allocation, and time spent, while giving you a clear forecast of your R&D tax returns. If you use Chrono, you can see a 30% boost in tax credits and file 8x faster. 

Direct R&D Activities Examples

Now that we’ve broken down what R&D really means, here’s what direct activities actually qualify.

• Experimental research: Testing bold ideas, challenging assumptions, and figuring out what really works (and what totally doesn’t)
• Prototype development: Building early versions of a product just to break it, fix it, and make it better
• Innovation in design: Taking a fresh approach to solve technical problems in more efficient ways
• Data analysis: Turning test results and raw numbers into actionable insights that guide the next build
• Technology development: Designing or improving the tech that powers your product via faster code, stronger systems, and cleaner processes
• Scientific research: Digging into the why behind it all, with structured investigations that drive smarter decisions

Indirect R&D Activities Examples

Direct R&D gets the spotlight, but the supporting work around it matters just as much.

Under the U.S. R&D tax credit program, eligible wage expenses include not just those doing the research, but also those supporting or supervising it. This covers:

• Direct research work: Employees directly involved in qualified R&D activities.
  
  
• Direct supervision: First-line managers overseeing the technical work.
  
  
• Direct support: Team members assisting with hands-on tasks like prototyping or testing.

Qualified wages include all taxable compensation, such as salaries, bonuses, and even stock option redemptions.

In some European countries, consultants may advise to include:

• Ancillary operations: Handling the essentials like hiring technical staff, leasing lab space, or maintaining research equipment and computers
• Training: Programs built to upskill team members specifically for their role in an R&D project
• University research: Contributions from student researchers or academic collaborators that support a defined R&D goal
• Feasibility studies: Early-stage research to figure out if an idea is even worth building in the first place
• Direct conduct, supervision, and support:  Employee wages (taxable income with bonuses and stock option redemptions included) paid to those who are hands-on in research, managing R&D teams, or assisting with tasks like prototype testing

Canada’s SR&ED program takes a similar approach. Along with core R&D as we explored above, certain support work may also qualify if it directly contributes to the main research and fits the technical scope. 

That includes:

• Engineering
• Design
• Operations research
• Mathematical analysis
• Computer programming
• Data collection
• Testing
• Psychological research

Routine work or anything loosely tied to the project?

That’s not going to cut it. 

Real R&D Tax Credit Examples

You’ve seen how the R&D credit works, now let’s look at who’s actually using it and what they have gained through it.

1. GBatteries

GBatteries is a battery tech company pushing the limits of what’s possible in EV innovation. With a focus on lithium metal batteries and a proprietary battery management system, they faced complex technical challenges early on. 

Through the SR&ED program, they secured funding that directly supported R&D, which resulted in 60+ patents, key breakthroughs, and growing investor interest.

Lesson learned: When R&D is a core business component, leveraging the right tax credit program can speed up innovation without compromising cash flow.

2. cStar Technologies Inc.

Based in Ontario, cStar Technologies develops two-way wireless communication systems that power everything from machines to mobile commerce. 

With support from Canada’s tax credit incentives, they were able to run complex experiments without the fear of failure, reduce development expenses, and bring new wireless solutions to market. The program also helped them secure patents and grow a high-skilled team in Canada.

Lesson learned: When R&D involves trial, error, and invention, the right tax incentive program can make innovation a whole lot more sustainable.

3. AmacaThera

AmacaThera, a biotech startup in Toronto, worked on designing post-op pain relief tech that aims to reduce opioid use. During the early stages, especially in the times of COVID, they leaned on the SR&ED funding to keep their research moving. 

A pre-claim consultation helped them confirm their eligibility, and the funding that followed kept their clinical trials on track and their capital working efficiently.

Lesson learned: Getting clarity early on with a pre-claim consultation can save time, reduce risk, and keep your R&D momentum strong, even in times of economic risk.

Not sure how much you can claim? Chrono’s accrual view shows your potential SR&ED credit in real time.

 4. Wilder Harrier

Wilder Harrier started in Montréal with a simple idea: pet food could be healthy, sustainable, and way more innovative. Instead of sticking to the usual ingredients, they explored insect protein and upcycled produce, which takes real R&D to get right. 

The SR&ED tax credit helped them move fast, fine-tune their formulas, and get those products out the door. 

Lesson learned: When your R&D is rooted in sustainability, financial support like this can turn a wild idea into a shelf-ready product. 

5. Hydrogen in Motion Inc.

When Hydrogen in Motion (H2M) started building their hydrogen storage tech in Vancouver, they knew they were onto something big. But funding was tight, and COVID made things even harder.

Luckily, they got selected for a free, in-person advisory service through the SR&ED program. That support helped them file confidently, unlock critical funding, and keep the innovation flowing when everything else had slowed down.

Lesson learned: Sometimes, it’s not just the tax credit. It’s the expert support behind it that keeps your business moving when it matters most.

6. Turkana

Turkana launched in 2013 with big ambitions: use imaging tech and data to tackle challenges across defense, medicine, and energy. But R&D isn’t cheap, and scaling new tech in industries like geothermal or wastewater processing takes real cash flow. 

That’s where the SR&ED incentive came in. Instead of slowing down, it helped Turkana hire new developers, push forward with software innovation, and expand their focus on environmentally friendly solutions. According to CEO Tim Davies, this regular credit quite literally kept the company alive.

Lesson learned: For early-stage startups, steady funding isn’t always guaranteed. But programs like SR&ED can step in to help teams innovate when investor cash or revenue can’t.

7. Motion Metrics International Corp.

Mining isn’t exactly the first place you’d expect cutting-edge AI. But that’s exactly where Motion Metrics is making waves. From their HQ in Vancouver, they’re using machine learning and computer vision to boost safety, productivity, and sustainability in mines around the world. 

However, innovation at this level isn’t cheap. That’s why the SR&ED tax credit was essential. It allowed AmacaThera to keep pushing boundaries in R&D while staying on track for growth.

Lesson learned: With the right financial support, even traditional sectors like mining can become playgrounds for AI-driven transformation.

8. Pattison Sign Group

Toronto-based Pattison Sign Group has grown into a leading signage manufacturer, thanks to a strong R&D focus backed by the SR&ED funding. 

During an audit, their team worked closely with SR&ED staff who supported the process and helped them improve how they track and document R&D work. That feedback led to a restructured team and a new ERP (Enterprise Resource Planning) system to streamline future claims. 

Lesson learned: A good documentation process isn’t just about staying compliant. It’s a competitive advantage that strengthens future R&D efforts and funding potential.

Confused about how to track and document your R&D activities without all the manual effort? Just add your eligible activities in Chrono and let it handle the rest.

9. Autovance Technologies

When Autovance Technologies first stepped into the world of R&D tax credits, they didn’t go in blindly. The Alberta-based software company, focused on web-based pricing tools for the auto industry, signed up for the First-Time Claimant Advisory Service. 

That one move gave them clarity, confidence, and a clear roadmap for what to track and how to claim it. The result? They stayed focused on building, scaled fast, and carved out a name in Canadian automotive tech.

Lesson learned: For growing tech companies, early clarity around R&D claims can shape how you scale. 

10. Rio Tinto Fer et Titane (RTFT)

When you’ve been in the game for 70+ years, like RTFT, staying competitive means doing more than business as usual. The moment their team took on the challenge of decoupling titanium concentrate from iron, they didn’t just jump into the deep end. 

Instead, they tapped into the SR&ED Program’s pre-claim consultation, a smart move that gave them details on what qualified and helped de-risk the path ahead. As a result, there was more focus, fewer surprises, and the kind of tax support that fuels long-term innovation.

Lesson learned: At scale, innovation isn't just about breakthroughs. It is about removing friction. When processes are complex, the real win is support that clears the path so your team can focus on solving the hard problems. 

Want flexibility in how you claim SR&ED? With Chrono, you can do it yourself, bring your own consultant, or work with our experts – it’s your call.

R&D Tax Credit Examples by Industry

While we've looked at real brands that have cashed in on R&D tax credits, now it’s time to break it down by industry: what types of expenses qualify, what doesn’t, and the common mistakes that could cost you.

1. Technology and Software Development 

Software development companies had the second-highest share of R&D claims in 2022, i.e., 21% of the total. If you’re one of them, tapping into the R&D tax credit can significantly reduce your tax liability. 

Eligible Expenses: 

• Salaries for developers, designers, QA testers, product managers, and technical leads directly involved in R&D
• Cloud services costs used for the development process, testing, and deployment of experimental features
• Designing and developing new or improved software platforms, systems, or applications
• Creating proprietary algorithms or custom codebases
• Integrating third-party APIs in novel or technically complex ways

Mistakes to Avoid: 

• Claiming basic bug fixes, UI updates, or feature patches as R&D
• Failing to track iterations or undocumented development work
• Including post-development maintenance and customer support efforts

2. Manufacturing 

Manufacturing teams constantly push boundaries to reduce defects, improve output, and adapt to new specs, and much of that belongs to qualified expenses.

Eligible Expenses: 

• Taxable wages of engineers and technicians working on new tooling, custom machinery, or advanced manufacturing processes
• Material costs for building and testing prototypes for the development or improvement of products
• Building automation systems to increase throughput or reduce waste
• Designing and testing fixtures, molds, or custom equipment configurations
• Implementing and refining the Six Sigma or lean manufacturing process with technical uncertainty

Mistakes to Avoid: 

• Claiming commercial production processes that follow a known method
• Including rework or standard quality checks that don’t involve any new process of experimentation
• Assuming changes to aesthetics or packaging count without a technical improvement

3. Architecture 

Only 28% of architecture firms have tapped into the R&D tax credit, according to an AIA survey. The problem? Most don’t even realize they’re doing business activities that qualify as R&D. 

Eligible Expenses: 

• Architect and drafter wages tied to structural innovation
• BIM/CAD modeling to simulate and test energy performance
• Designing custom facade systems or integrating renewable energy
• Researching and testing innovative construction materials (e.g., green concrete, advanced insulation)
• Creating adaptive reuse strategies that require new engineering solutions

Mistakes to Avoid: 

• Assuming LEED or green certification efforts automatically qualify without technical experimentation
• Overlooking the role of subcontractors or external consultants in eligible design innovation
• Failing to separate eligible R&D work from non-qualifying phases like drafting or post-construction reviews

4. Engineering 

Engineering R&D is booming, with global investment set to grow 10% annually through 2026. If you're developing new systems, materials, or technical processes, there’s serious R&D credit potential waiting to be claimed. 

Eligible Expenses: 

• Salaries for teams optimizing building systems or mechanical/electrical components
• Testing and simulation of HVAC systems, load-bearing materials, or fireproofing solutions
• Prototyping of custom parts, assemblies, or systems using FEA/CFD tools
• Research into compliance with new codes or regulations requiring technical redesign
• Use of emerging technologies like 3D printing, advanced composites, or modular systems

Mistakes to Avoid: 

• Including routine CAD drafting or redlining work that follows known engineering principles
• Failing to document parametric changes during prototype iterations (e.g., load calculations, flow rates)
• Not logging internal test results or simulation outputs that support experimentation

5. Food and Agriculture 

Farming isn’t just soil and sunlight anymore. It’s science, sensors, and serious R&D. Whether you're tweaking seed genetics or testing eco-friendly packaging, there's a good chance your work is eligible for the R&D tax credit.

Eligible Expenses:

• Salaries for agronomists, food scientists, chemists, and lab technicians involved in R&D
• Trials to improve crop yield, pest resistance, or climate adaptability
• Research and testing of organic or bio-based pesticides/fertilizers
• Product formulation for alternative proteins, shelf-life extension, or clean-label innovation
• Developing sustainable packaging solutions (e.g., compostable films, biodegradable containers)

Mistakes to Avoid: 

• Claiming marketing-focused reformulations with no technical challenge
• Including packaging design with no performance-based testing or innovation
• Not tracking failed tests or formulations (they still qualify!)

How to Identify R&D Opportunities in Your Business?

Not sure if your work aligns with qualified activities? 

Start by asking the right questions:

• Are you solving technical challenges with no guaranteed outcome?
• Is your team experimenting, coding, building, or testing new solutions?
• Do you document progress, iterations, or even failed attempts?

If the answer’s yes, there’s a good chance you’ve got R&D activity happening, and that means potential for tax credits.

Struggling to keep track of who did what, and when, on your R&D projects? Use tools like Chrono to track time, expenses, and project activity in real time. It makes validating your R&D credit way easier (and audit-proof).

Final Thoughts: Don’t Leave Money on the Table

Think R&D development tax credits don’t apply to you? 

You’d be surprised. Companies are getting real money back for work they’re already doing, such as writing code, running tests, and solving technical problems. 

If there’s experimentation involved, you might be eligible. Just remember: not fulfilling all the documentation requirements can mean a huge loss. So, track everything and stop letting free money go unclaimed.

Let Chrono help you spot eligible R&D work directly from your engineering tools, track time and financial records in real time, and build audit-ready documentation. Talk to us today!

FAQ

What is an example of an R&D tax credit?

An example of an R&D tax credit is a software company claiming credits for developing a new feature involving technical uncertainty. They can include wages for developers, testing costs, and prototyping. The credit helps offset expenses by reducing tax liability and encouraging continued investment in research and innovation.

What expenses can qualify for R&D credit?

Qualified research expenditures for federal tax credit include wages for employees directly involved in R&D, supplies used in the research process, and contract expenses. These costs must be directly tied to activities aimed at developing advanced technology and must involve technical uncertainty.

What documentation do I need for an R&D tax credit?

To support an R&D tax credit claim, you’ll need detailed business records showing the technical work involved. This includes project descriptions with objectives and uncertainties, time-tracking records for employees involved, payroll data, test results, design iterations, emails discussing development, supply invoices, and contracts with external researchers.

What is the maximum R&D credit?

There’s no set federal limit on how much R&D tax credit a business can claim against income tax. However, for qualified small businesses, the credit applied to payroll taxes is capped at $500,000 per year. This boost allows startups to offset more payroll taxes and improve early-stage cash flow.

Is the R&D tax credit worth it?

Yes, the R&D tax credit is a valuable incentive. It offers a dollar-for-dollar reduction in tax liability, effectively lowering a company's tax burden.

How much is the R&D credit?

The R&D tax credit typically averages around 10% of qualified research expenses. But the exact amount can vary based on how it’s calculated, using either the Regular or Alternative Simplified Credit method. Since it is a complex process, we recommend that you consult tax professionals for accurate tax credit calculation.