Important changes to SR&ED program for Canadian businesses

Learn about the proposed changes and updates to the SR&ED program.

Last Updated Dec 16, 2025

Important Changes to SR&ED Program for Canadian Businesses

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The federal government is implementing significant changes to the Scientific Research and Experimental Development (SR&ED) program for taxation years that begin on or after December 16, 2024.

While the core principles of SR&ED remain the same, the program has several proposed reforms in the 2024 Fall Economic Statement. These proposed SR&ED reforms are meant to be in effect for taxation years that begin on or after December 16, 2024.

The SR&ED program already supports over 22,000 Canadian businesses, and with these changes, it hopes to support more small- and medium-sized Canadian businesses. The government is proposing a $1.9 billion investment in the program over the next six years, as well as the following changes:

Current SR&ED program	Proposed changes
CCPCs are offered a fully refundable enhanced tax credit at a rate of 35% on up to $3 million of qualifying SR&ED expenditures annually.	Increase the expenditure limit on which the enhanced 35% per cent rate can be earned from $3 million to $4.5 million. As a result, qualifying CCPCs would be able to claim up to $1.575 million per year of the enhanced, fully refundable tax credit.
The expenditure limit is gradually reduced where taxable capital employed in Canada for the previous taxation year is between $10 million and $50 million.	Increase from $10 million and $50 million, to $15 million and $75 million, respectively, the taxable capital phase-out thresholds for determining the expenditure limit.
Public companies are not able to claim refundable tax credits. The federal SR&ED tax credit rate for public companies is 15% of eligible SR&ED expenditures.	Extend eligibility for the enhanced 35% refundable tax credit to eligible Canadian public corporations on up to $4.5 million of qualifying SR&ED expenditures annually.
Capital expenditures have been excluded since 2014 and companies can only include eligible costs through certain overhead expenditures included within the proxy method, or individually claimed through the traditional method.	Restore the eligibility of capital expenditures for both the deduction against income and investment tax credit components of the SR&ED program.

You can learn more about the proposed changes in the 2024 Fall Economic Statement.

By familiarizing yourself with the eligibility criteria and staying informed about the proposed reforms, you can position your business to take full advantage of this powerful incentive. These proposed changes represent a significant opportunity for innovators across Canada—from growing startups to established public companies—to secure more funding for their R&D projects.

Try our SR&ED calculator or learn how you can maximize your SR&ED claim with Employment Hero to ensure you make the most of the program.

The SR&ED program can be a real game-changer, fueling even more creative problem-solving and propelling your work toward success. We encourage you to consult with an SR&ED expert to understand how these potential changes could impact your business and to ensure you are well-prepared for any new regulations as they are finalized. Remember, innovation keeps Canada moving forward, and the SR&ED program is here to help businesses like yours thrive!

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