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SR&ED
SR&ED is the federal program that refunds part of what a company spends solving technical problems. In March 2026 it was expanded more than it has been in over a decade. This page is here so you can work out whether it is worth pursuing, because plenty of companies doing qualifying work have never looked.
Straight away, so you can decide how to read the rest. I do not prepare SR&ED claims. They are a specialty with their own technical writing and their own audit exposure, and the firms that do them well do little else. What I can do is tell you whether your work looks like it belongs in the program, and coordinate with a specialist so the claim and the corporate return agree with each other.
Bill C-15 received royal assent on 26 March 2026, and it applies to tax years beginning on or after 16 December 2024. That retroactive reach is the part worth noticing, because it means a year you have already filed may now be worth more than it was assessed at.
The enhanced federal credit is 35% and refundable, meaning it produces a cheque rather than merely reducing tax. It applies up to an annual expenditure limit, and above that limit the rate drops to a basic 15% that is not refundable.
That limit has gone from $3 million to $6 million, which puts up to $2.1 million of refundable credit within reach in a single year. The limit begins to reduce once taxable capital employed in Canada reaches $15 million and disappears at $75 million, both up substantially from where they sat before.
Capital spending was removed from the program for 2014 onward. It is back. Depreciable property qualifies, other than a building or a leasehold interest in one, and excluding land, inventory and intangibles such as goodwill.
The condition is that when you bought it, the equipment was intended to be used all or substantially all of its operating life, taken as 90% or more, performing this work in Canada. The credit earned on capital is up to 40% refundable rather than the higher proportion current spending attracts, but for a company that bought a piece of test equipment or a prototype rig, it can be a meaningful addition.
Refundable credits used to stop at Canadian-controlled private corporations, so going public meant giving them up. Eligible Canadian public corporations can now keep them, provided they remain resident in Canada and controlled by Canadian residents. Their limit is worked out from average gross revenue over three years rather than taxable capital, and private companies can elect to use that same revenue measure if it suits them better.
If you have already filed for an affected year. The changes reach back, and the CRA is still updating its forms and guidance to match. That leaves a real choice about whether to file now under the old rules and amend later, wait for the updated forms, or file with the new limit applied by hand. Each route trades speed against the chance of the claim being looked at more closely.
This is a decision to make with whoever prepares the claim, and it is worth making deliberately rather than by default.
The most common reason companies miss this is a picture in their head of what research looks like: laboratories, white coats, universities. The program is considerably broader than that, and a good deal of qualifying work happens on shop floors and in software teams.
Three questions get you most of the way to an answer.
| Federal, enhanced | 35%, refundable, on qualified expenditures up to the $6 million limit. Available to Canadian-controlled private corporations and now to eligible Canadian public corporations |
|---|---|
| Federal, basic | 15%, not refundable, above the limit or where the enhanced rate does not apply. It reduces tax payable and can be carried forward |
| Ontario Innovation Tax Credit | 10%, refundable, on qualifying expenditures in Ontario up to an annual limit, which reduces as taxable paid-up capital rises |
| Ontario Research and Development Tax Credit | A further non-refundable credit on eligible Ontario expenditures |
The provincial credits reduce the federal claim, so the total is less than adding the rates together. The refundable ones are what matter most to a company that is not yet profitable, since they arrive as money rather than as a reduction in tax you were not paying.
Because salaries dominate, the practical question is usually how much of which people's time went into qualifying work. That is a records question, and it is answered far better during the year than reconstructed after it.
A claim must be filed within 18 months of the corporation's year end, being twelve months after the return's own due date.
This one is worth taking literally. It is a statutory deadline, and the CRA has no discretion to extend it. A claim filed the day after is not a late claim, it is no claim, whatever the merit of the work or the reason for the delay. There is no fairness provision, no taxpayer relief application, and no appeal that revives it.
Given the retroactive reach of the 2026 changes, the practical consequence is that any year still inside its window is worth a second look before the window shuts.
Where claims are reduced or refused on review, it is more often about evidence than about eligibility. The work was real, and nothing written down at the time shows it.
What helps, and what costs almost nothing if it is done as you go:
None of this needs to be formal. It needs to exist, and to be contemporaneous.
I do not prepare SR&ED claims, and I would be doing you no favours by trying. The technical narrative is a specific craft, the review process has its own conventions, and a weak claim is worse than no claim because it invites attention to the rest of the return.
What I do is next to it:
If the questions above sounded like your business, the next step is a conversation to work out whether it is worth a specialist's time. That conversation costs nothing and takes twenty minutes.
It can be. The test is not the field but the problem: was there technical uncertainty a competent developer could not have resolved using established practice, and did you work through it systematically? Building a conventional application from known components is not a claim. Solving a performance, scale or integration problem nobody had a method for may well be.
Yes. Success is not a condition. The program supports the attempt to resolve technical uncertainty, and knowledge that an approach does not work is knowledge. Abandoned prototypes and discarded versions belong in the record rather than in the bin.
Eighteen months from your year end. It is a statutory deadline and the CRA cannot extend it for any reason. Missing it ends the claim outright, so it is one of the few dates worth marking well in advance.
Possibly. The changes apply to tax years beginning on or after 16 December 2024, so a year already assessed may support a larger claim, particularly where you had capital spending or were above the old $3 million limit. If the year is still within its eighteen month window, it is worth reviewing.
No. It is a specialty, and claims are prepared better by people who do nothing else. I will tell you whether your work looks like it belongs in the program, help get the records into shape, coordinate with the specialist preparing it, and make sure the corporate return and the claim agree.
Sometimes not, and that is worth establishing early. Preparation costs money, review takes management time, and below a certain size the return does not justify either. A candid answer on that is more useful than an optimistic one.
This page describes the program in general terms as at August 2026 and is not advice for your company. Eligibility, rates and limits have technical conditions beyond what is set out here, and the CRA is still updating its forms and guidance following the 2026 legislation. The CRA's SR&ED tax incentive program pages are the authority.
That is the right question to ask before spending anything on it. Twenty minutes, no charge.
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