SR&ED program changes: what Canadian businesses need to know today
For the first time in over a decade, significant updates to Canada's Scientific Research and Experimental Development (SR&ED) program are creating new opportunities for businesses investing in innovation. Announced in Budget 2025 and building on commitments from the 2024 Fall Economic Statement, these changes modernize the SR&ED tax incentive program and signal renewed federal support for research and development.
Applicable to taxation years beginning after Dec. 16, 2024, these changes can help you access more funding, improve cash flow, and support your growth ambitions. Here's what you need to know—and how we can help you take full advantage.
The key changes include:
If you're a Canadian-controlled private corporation (CCPC) or eligible public company, you can now claim up to $2.1 million annually in refundable credits—double the previous $1.05 million limit. The expenditure limit to access the 35% refundable investment tax credit (ITC) has increased from $3 million to $6 million, creating immediate cash flow opportunities for businesses investing in research and development (R&D).
For the first time, Canadian public corporations (not controlled by non‑residents) may be eligible for the enhanced 35% refundable ITC. This opens the door for small and mid‑sized public companies to access refundable credits previously limited to private corporations.
The taxable capital phaseout range is set to increase from $10–$50 million to $15–$75 million, creating more room for growing businesses to qualify. Additionally, CCPCs and Canadian public corporations (not controlled by non-residents) can now elect to calculate their expenditure limit based on average gross revenue instead of taxable capital. This flexibility supports continued investment in innovation while improving potential cash flow for your business.
After being removed from the SR&ED program in 2014, equipment and lease costs related to research and development (R&D) are once again eligible for deduction and credit, provided they are primarily used in SR&ED activities and acquired or payable after Dec. 16, 2024. This reinstatement means you can now recapture a broader range of your innovation costs.
Why this matters for Canadian businesses
The updates reflect the evolving needs of Canada’s innovation economy and may be especially beneficial for manufacturing and technology‑driven companies. Canadian businesses reliant on capital‑intensive R&D – such as advanced manufacturing, cleantech or process automation – can now recapture a broader range of costs. Canadian public companies and CCPCs that have traditionally exceeded taxable capital limits may also find new opportunities to improve cash flow through refundable credits
Next steps
If your company invests in product development, process improvements or other innovation‑driven initiatives, these new rules could have a direct impact on your ability to claim and maximize incentives. Our SR&ED team works alongside you to:
Assess your eligibility under the new rules
Identify all qualifying activities and expenditures
Build a claim strategy tailored to your business
Maximize your refundable credits and cash flow
Seize new funding opportunities today. Let's start the conversation.
