Is the SR&ED tax credit a refund or just a deduction against tax I owe?

SR&ED actually provides both, working together rather than as alternatives. Eligible expenditures are generally deductible against your corporation's income, reducing the taxable income on which corporate tax is calculated, and separately generate an investment tax credit that can reduce the tax otherwise owing. For many smaller corporations, a portion of that credit is refundable, meaning it can produce an actual cash refund from CRA even if the corporation has little or no tax payable that year.

This refundable component is often the more valuable part of the program for small and early-stage companies, since a deduction alone is only useful if you have taxable income to apply it against, while a refundable credit can put real cash in the business's hands regardless of profitability. Larger corporations, or those that don't meet the criteria for the refundable treatment, may instead receive a non-refundable credit, which only reduces tax otherwise owing rather than generating a refund.

Understanding which component applies to your specific corporation, and that the deduction and the credit are two separate but related benefits, not one single number, matters for accurately forecasting the actual cash benefit of an SR&ED claim before you file it.