SR&ED changes could boost your research and development investment

Updated: April 10, 2026

Recent changes to Canada’s scientific research and experimental development (SR&ED) tax incentive program could make it more attractive for businesses to engage in research and development (R&D) activities in Canada. 

These updates to SR&ED, enacted as part of Bill C-15, could create a substantial opportunity for Canadian-controlled private corporations (CCPCs) to secure additional refundable credits to develop technological or scientific advancements and ultimately boost innovation in Canada. The amendments apply to tax years that begin on or after December 16, 2024, and include measures to:

• Raise the expenditure limit for CCPCs and their associated groups to qualify for 35% refundable tax credits to $6 million (from $3 million). 
• Delay the phase-out of 35% refundable tax credits for CCPCs and their associated groups by increasing the threshold range to between $15 million and $75 million of taxable capital employed in Canada from the preceding year (from between $10 million and $50 million).
• Allow “eligible Canadian public corporations” and their consolidated groups to also qualify for the 35% refundable tax credits (previously only available to CCPCs) on the maximum $6 million expenditure limit.
• Introduce the phase-out of 35% refundable tax credits for eligible Canadian public corporations and their consolidated groups with an average gross revenue between $15 million and $75 million over the preceding three fiscal years.
• Allow CCPCs and their associated groups to elect to have their expenditure limit phased-out by their gross revenues instead of their taxable capital (similar to eligible Canadian public corporations).

There’s also an opportunity for every claimant to obtain further SR&ED benefits based on the measure to reintroduce tax credits for SR&ED capital expenditures on property acquired on or after December 16, 2024, and SR&ED lease costs first payable on or after December 16, 2024 (previously eliminated in 2014). 

Are you an eligible Canadian public corporation?

A public corporation that’s resident in Canada and not controlled, directly or indirectly, by non-resident persons of Canada will generally be considered an eligible Canadian public corporation. 

Examples of how proposed changes could impact support

The return of capital expenditures and lease costs

Under the proposed changes, corporations will be able to claim eligible capital expenditures again for certain property acquired. The value of the tax credit and the proportion that will be refundable will depend on several factors, including whether you’re a CCPC or an eligible Canadian public corporation and your expenditure limit. Generally, only 40% of tax credits earned at 35% against capital expenditures will be refundable with the remaining 60% being non-refundable.

Capital expenditures may be eligible if depreciable property is acquired on or after December 16, 2024, or lease costs are first payable on or after that date. In addition, at the time of acquisition, 90% or more of the property’s value must be intended to be consumed in R&D activities or 90% or more of the property’s operating time must be intended to be used for R&D activities. If the property is used more than 50% of the time but less than 90% for R&D, you may still be able to qualify for tax credits as shared use equipment under certain conditions but at a reduced rate. 

For help navigating these proposed changes, contact your local advisor or reach out to us here.

Disclaimer

^{The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.}