Summary: Bill C-15 has delivered the largest Scientific Research and Experimental Development (SR&ED) expansion in over a decade, increasing access to enhanced refundable credits, restoring eligibility for capital expenditure claims, and extending support to eligible Canadian public corporations. With $4.5 billion in allowed investment tax credits in 2024–2025 and combined federal and provincial recovery rates as high as 60%, Canadian businesses should now reassess eligible projects, documentation, capital plans, and the CRA Pre-Claim Approval Process.
Is Your Business Taking Full Advantage of SR&ED?
The SR&ED tax incentive program is Canada’s largest federal program supporting business-led research and development (R&D). Administered by the Canada Revenue Agency (CRA), SR&ED supports Canadian businesses of all sizes and across virtually every sector that conducts eligible R&D in Canada.
The tax incentive program provides three forms of support: an income tax deduction that reduces taxable income; a non-refundable tax credit (ITC) that reduces tax payable; and, where eligible, a refundable cash credit that returns money directly to the business.
At the federal level, the basic ITC rate is 15%. Eligible Canadian-controlled private corporations (CCPCs) can claim an enhanced 35% refundable credit on qualified expenditures up to the annual limit.
SR&ED is not reserved for deep-tech labs or biotech startups. According to CRA Annual Program Statistics, Canadian businesses filed 22,758 SR&ED claims between 2024 and 2025, with $4.7 billion in claimed ITCs and $4.5 billion in allowed ITCs.
With expanded rules and the new CRA Pre-Claim Approval Process, businesses should review eligible projects, documentation, and capital spending before missed claims or weak support reduce the available value.
For Canadian businesses, the program can be especially relevant when projects involve technical uncertainty, experimentation, or knowledge advancement. This includes work in software, manufacturing, clean technology, agriculture, food and beverage, aerospace, energy, and many other innovation-driven sectors.
What Changed Under Bill C-15? The 2026 SR&ED Expansion
On March 26, 2026, Bill C-15 (Budget Implementation Act, 2025, No. 1) received Royal Assent. It delivered the largest SR&ED expansion in over a decade and applies to tax years beginning on or after December 16, 2024.
Bill C-15 includes several SR&ED enhancements intended to support R&D investment, improve access to enhanced credits, and recognize the role of capital-intensive innovation. Specifically, three major changes have reshaped the program and given Canadian innovators reason to recalibrate their approach:
The enhanced 35% credit limit doubled
One of the most important changes is the increase in the annual SR&ED expenditure limit for the enhanced 35% refundable credit. The limit increased from $3 million to $6 million. This means eligible CCPCs can now claim up to $2.1 million in refundable credits each year, which is double the previous limit.
Bill C-15 also increased the taxable capital phase-out thresholds. The lower threshold rose from $10 million to $15 million, and the upper threshold rose from $50 million to $75 million, allowing more capital-intensive businesses with higher taxable capital to qualify for enhanced SR&ED support.
Capital expenditures are eligible again
Another significant change is the restoration of SR&ED capital expenditure eligibility for both the income deduction and ITC components. Capital expenditures were generally removed from SR&ED eligibility for expenditures incurred after 2013.
This is a major reversal that big advisory firms have flagged, but most mid-market resources have not. For manufacturers, robotics companies, clean technology firms, and any business that builds or buys equipment as part of its R&D, this change unlocks substantial new claim value.
Eligible Canadian public corporations now qualify for the enhanced credits
An Eligible Canadian Public Corporation (ECPC) is a Canadian-resident public company that’s listed on a designated stock exchange and isn’t controlled by non-residents.
Bill C-15 extends the enhanced credit to ECPCs for the first time. This marks an important shift, as the enhanced refundable credit was previously available only to qualifying private corporations. For public companies that continue to invest in R&D after scaling, this will improve access to SR&ED support.
CCPCs may also elect to have their expenditure limit for the enhanced SR&ED credit determined using the same gross revenue-based phase-out structure proposed for Canadian public corporations. This gives businesses an alternative path to enhanced support based on revenue rather than taxable capital.
SR&ED Credit Rates and How Stacking Works
At the federal level, eligible CCPCs and ECPCs can access the 35% enhanced refundable ITC on qualified SR&ED expenditures up to $6 million. Beyond that limit, SR&ED tax support generally includes a 15% basic ITC.
The federal R&D tax credit is only part of the incentive landscape. Key provinces — Ontario, Quebec, British Columbia, Alberta, and Saskatchewan — each maintain active R&D credit programs, often with enhanced rates or refundable components for various enterprises. Most provinces layer their own credits on top of the federal program, with provincial rates typically ranging from about 8% to 25%, depending on the jurisdiction and the nature of the claimant. When provincial credits are combined with the federal SR&ED credit, eligible Canadian businesses can recover a substantial portion of qualifying R&D expenditures, commonly between roughly 43% and 60% of the costs.
Stacking can significantly increase the total value of available R&D support, but it also adds complexity. Rates, refundability, eligible expenditures, and filing requirements vary by province. Businesses should assess federal and provincial rules together rather than treating each incentive in isolation.
The correlation between SR&ED and other funding programs also matters. SR&ED and the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP) funding can interact, but the same eligible expenditures cannot be subsidized twice. IRAP funding typically reduces SR&ED-eligible costs dollar-for-dollar, which lowers the value of the SR&ED claim. Canadian businesses receiving IRAP funding should plan carefully and review how the incentives interact before filing.
Who Qualifies for SR&ED? Eligible Work and Industries
Not every improvement, product update, or technology project qualifies for SR&ED. The CRA focuses on three criteria as the basis of eligibility:
- Technological Uncertainty: Exploring solutions in the form of new technology or improvements to existing technology where the outcome is unknown or not obvious.
- Systematic Investigation: Conducting an intentional, well-documented investigation through experimentation and analysis.
- Technological Advancement: Creating new, improved, or optimized processes or technology that advance scientific or technological knowledge.
In practical terms, eligible work usually involves solving a technical problem for which the answer is not readily available. The company must also follow a structured process that includes testing, analysis, and documentation of results.
For most Canadian businesses, experimental development is often the most relevant category, as it involves work aimed at advancing technology by creating or improving materials, devices, products, or processes.
Supporting work may qualify when it directly supports eligible SR&ED activities. This includes engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or psychological research, depending on the facts.
Software development qualifies for SR&ED when the work involves technical uncertainty, experimentation, and advancement beyond routine development. A Canadian software company developing a new machine learning model to solve a previously unsolved data problem could qualify. Routine coding, maintenance, configuration, and standard implementation do not qualify on their own.
Manufacturing and clean technology projects qualify for SR&ED when they involve developing new processes, improving production efficiency, reducing waste, testing new materials, or solving technical challenges that cannot be addressed through standard practices. Routine process improvements, standard testing, and ordinary production changes do not qualify on their own.
If your industry falls on the list below, you are more likely to have SR&ED-eligible work:
- Software and software as a service (SaaS)
- Manufacturing
- Clean technology
- Biotechnology and life sciences
- Agriculture
- Food and beverage
- Aerospace
- Energy and resources
How to Maximize Your SR&ED Claim
Documentation is the single most important factor in a successful SR&ED claim. Businesses should record technical work as it happens, rather than reconstructing it after the fact.
Proper documentation supports eligibility, links costs to qualifying activities, and reduces risk during a CRA review. Useful documentation includes project plans, technical narratives, hypotheses, test records, design iterations, failure analyses, prototypes, time tracking, meeting notes, and cost records. The goal is to clearly demonstrate the problem investigated, the work performed, the results observed, and the advancement or knowledge gained.
Timing also matters. SR&ED claims must be filed within 18 months of the end of the tax year in which the eligible expenditures were incurred. Waiting too long makes it harder to gather evidence, document timelines, or identify qualifying costs.
Businesses should also consider the CRA’s new Pre-Claim Approval Process. As of April 1, 2026, eligible businesses can use this optional process to confirm whether planned projects qualify for SR&ED tax incentives before incurring costs. According to the CRA, determinations are typically issued within eight weeks after completing the application in My Business Account.
The process is available to CCPCs, Canadian corporations, and Canadian partnerships in good standing with an annual gross income of under $25 million. Up to three projects can be submitted, and approvals may remain valid for up to three years.
With Bill C-15 changes in effect, now is the time to revisit your SR&ED strategy. Businesses should review capital investment plans, identify potential eligible projects, assess whether they qualify for the enhanced credit, and confirm that documentation processes are robust enough to support a claim.
Final Thoughts: Revisit Your SR&ED Claims Strategy Now
The expanded SR&ED program under Bill C-15 gives Canadian businesses a timely opportunity to capture more value from eligible R&D and capital investment.
To benefit, companies should reassess their projects, credit eligibility, documentation, and filing timelines before costs are missed or support becomes difficult to prove.
Strong records, early technical analysis, and clarity on how federal and provincial credits interact will improve claim quality and reduce CRA review risk.
For businesses developing new products, processes, software, or clean technologies, SR&ED planning under the new rules should be part of a broader tax strategy, not a year-end compliance exercise. The companies that act on Bill C-15 now will be the ones capturing the full value of the expanded program.