Canada’s main research and development (R&D) tax credit just got its most significant overhaul in more than a decade.
Reforms to the Scientific Research and Experimental Development (SR&D) program came into effect today, bringing expanded eligibility, higher thresholds, and a new pre-claim approval process.
SR&ED is the federal government’s main R&D tax incentive, offering deductions and investment tax credits against eligible expenditures. It accounts for nearly $4 billion in annual federal support.
The reforms were part of Bill C‑15, An act to implement certain provisions of the budget tabled in Parliament on November 4, 2025, which was signed into law on March 26.
Canadian innovators have been pushing for reform for years.
The program has long been criticized as too slow, too complex, and too narrowly scoped, particularly for companies that had grown past the earliest stages of development. The Council of Canadian Innovators (CCI), which has advocated for SR&ED reform over several years, has argued the core problem is whether existing investment was delivering strong enough outcomes on IP retention and global competitiveness.
Expanded eligibility and higher thresholds
The biggest eligibility shift involves public companies.
Canadian-listed firms that are Canadian-controlled, along with their Canadian-based subsidiaries, can now access enhanced SR&ED credits on the same terms as Canadian-controlled private corporations.
Before, that enhanced rate was unavailable to firms once they reached a certain scale or went public.
The cost of equipment and physical infrastructure is now eligible, a meaningful addition for deep tech, semiconductor, agtech, and manufacturing companies.
The taxable capital threshold for enhanced credits rises from $50 million to up to $75 million, and the expenditure limit goes from $3 million to up to $5 million, keeping more scaling companies inside the enhanced tier for longer.
Know before you file
The new pre-claim approval pathway may end up being the change that shifts day-to-day behaviour most.
Previously, companies had to invest in R&D with limited clarity on whether their work would qualify.
According to the CCI, review timelines ran as long as 180 days, and many companies turned to third-party claim preparers to navigate the process, adding cost and reducing how much of the program’s value actually reached them.
Reducing that reliance on the middleman is a clear goal of this more simplified process.
Under the new pathway, companies can find out if their work qualifiesn before filing a full claim. The service standard is eight weeks from application to decision.
Claims selected for review under the pre-claim approval (PCA) pathway are now subject to a 90-day timeline. Intake runs year-round rather than being tied to tax season, and companies already in good standing with CRA have a fast-track option.
The pre-claim approval is a first-generation rollout, and the CRA and the Department of Finance are actively seeking industry feedback on how it works in practice.
Implementation will be the test
The CCI has been direct about what was broken.
SR&ED has historically struggled to translate public investment into IP retention and globally competitive companies. The argument was that existing investment needed to deliver stronger outcomes.
Daniel Perry, director of federal affairs at CCI, says he sees the reforms as targeted responses to problems companies have been raising consistently, not marginal adjustments.
He also points to a growing recognition in government that support programs need to reflect how companies actually grow, with a stronger focus on intellectual property, data, and the conditions required to scale globally.
“What we’re seeing is a meaningful shift toward a system that actually works for scaling companies,” he said in a CCI statement on the reforms.
“There is a growing government recognition that programs like SR&ED need to support companies through the full lifecycle of growth, not just at the earliest stages.”
Perry appears to be cautiously optimistic rather than declaring victory. Questions remain around how the program will support Canadian-controlled firms, how outcomes will be measured, and how closely R&D support will connect to commercialization and long-term competitiveness.
“Ensuring that the system works as intended — and that it continues to evolve in response to how companies operate — will be critical,” he wrote yesterday.
The reforms are a strong step forward. Whether the program delivers on that intent is the next question.
Final shots
- The pre-claim approval pathway is a first-generation rollout. CRA and the Department of Finance are actively seeking industry feedback, and further changes are expected.
- Public companies that previously aged out of enhanced SR&ED support should review their eligibility under the new rules.
- The inclusion of capital expenditures is particularly relevant for deep tech, semiconductor, agtech, and manufacturing companies whose R&D is tied to physical infrastructure.
