What tech founders should know about the 2025 federal budget and why this year is the perfect time to double down on SR&ED

If you’re building a Canadian startup in 2025, this year’s federal budget should be on your radar. Whether you already claim SR&ED or you’re considering filing for the first time, the updates introduced this year make the program more founder-friendly than it’s been in years.

When you pair these changes with the right people and operations infrastructure, like Employment Hero’s Employment Operating System and white glove SR&ED service, these benefits can help early-stage teams scale faster, stay compliant and reinvest more capital into product development.

Let’s break down what matters most for founders.

SR&ED just became even more valuable for startups

For many early-stage tech companies, SR&ED is the difference between extending your runway or scrambling for capital. The 2025 budget expands the program in ways that directly benefit high-growth startups.

Higher refund potential for small teams

The enhanced refundable SR&ED credit now applies to a larger pool of eligible expenses. If you’re operating with a lean team of engineers, product builders or data scientists, this could translate into tens or even hundreds of thousands of dollars in additional support each year.

Hardware, prototypes and gear are back on the table

Capital expenses such as servers, prototypes, robotic equipment, and testing equipment now qualify again. This is a huge win for AI, robotics, hardware and deep-tech founders.

Public companies included — future-proof your structure

If you plan to list publicly or have investors pointing you in that direction, the enhanced SR&ED rate will now apply to more corporate structures, not only private ones.

Pre-claim approval reduces risk for founders

Startups depend on clarity.  The new pre-claim process lets you validate a project before committing resources. That means:

• Fewer surprises at tax time
• Clearer budgeting for technical hires
• Stronger financial models for investors

Bottom line: Claiming SR&ED is now easier, less risky and more rewarding, especially for emerging tech founders.

More growth capital for Canadian startups

Alongside SR&ED enhancements, the budget strengthens Canada’s support system for high-growth companies.

$1B in new BDC funding for scale-ups

As you graduate from early traction to scale-up mode, BDC will have more funding to deploy. This boosts your chances of accessing: 

• Non-dilutive financing
• Equity investments
• Expansion capital

More resources to protect IP

Programs supporting intellectual property (IP) strategy and commercialization are receiving renewed funding. For founders, this means better access to:

• Patent strategy support
• IP management tools
• Commercialization guidance

Why this budget matters for early-stage teams

Early-stage tech founders consistently face three challenges:

1. Finding and affording great talent
2. Navigating compliance without specialist teams
3. Securing enough capital to keep building

This budget moves the needle on all three.

Where Employment Hero fits in: The infrastructure layer for your people, processes & SR&ED claims

Many founders leave SR&ED money on the table. ot because they’re ineligible, but because they lack the documentation, tracking systems or clarity to support a strong claim.

Employment Hero’s white glove SR&ED service, paired with our Employment Operating System (EOS), integrates HR, payroll, contractor management, onboarding, performance reviews and support for compliance into a single, founder-friendly platform.

And here’s how it helps specifically with SR&ED:

1. Track technical work more accurately

With structured workflows, job descriptions and performance documentation, you can more easily trace which employees contribute to qualifying R&D work.

2. Keep payroll data audit-ready

SR&ED claims often fall apart around payroll documentation. EOS keeps everything clean, accurate and exportable.

3. Support global or remote-first teams

If your developers sit across provinces or countries, EOS supports compliance while helping founders maintain transparent records. This is absolutely critical when calculating eligible costs.

4. Reduce admin so founders stay focused on building

The less time you spend wrangling spreadsheets, onboarding contractors or managing manual HR tasks, the more time you can dedicate to product innovation: the core of your SR&ED claim.

In short:
When your people operations run smoothly, your SR&ED claim becomes stronger and your burn becomes lower.

How founders can take advantage of these changes right now

Here’s what early-stage teams should consider doing in the next 90 days:

✔ Revisit your SR&ED claim strategy

If you’ve been claiming conservatively, or not at all, this is the time to explore it again. Employment Hero offers white glove claim writing.

✔ Strengthen  your documentation processes

Even small teams need clean recordkeeping. EOS makes this effortless.

✔ Map your hiring plan to new SR&ED opportunities

More refundable credits = more confidence in hiring engineers, PMs, data professionals and technical leadership.

✔ Review capital needs for hardware or prototyping

With capital equipment eligible again, hardware and deep-tech founders have a rare opportunity to accelerate.

Final thoughts for founders

Canada’s 2025 budget sends a clear signal: the government wants early-stage innovators to build boldly and build here. With improved SR&ED incentives, more accessible growth funding and better talent pathways, founders have a unique opportunity to extend their runway, hire faster and double down on product development.

Pair that with the right operational infrastructure, like Employment Hero’s Employment Operating System, and you create a flywheel:

Better documentation → stronger SR&ED claims → more cash → more hiring → faster innovation

Build faster. Document smarter. Claim more.