Overview | Key Findings
A Quick Overview
- The annual expenditure limit for the enhanced 35% credit has increased from $3 million to $6 million.
- The taxable capital phase-out thresholds rose from $10M–$50M to $15M–$75M, keeping scaling companies eligible longer.
- Eligible Canadian public corporations can now access the enhanced refundable credit, previously reserved for Canadian Controlled Private Corporations
- (CCPCs).
- More ways for capital intensive corporations to access the enhanced refundable credit using a revenue test.
- Capital expenditures are back: equipment and machinery used in SR&ED can once again be claimed, for the first time since 2014.
- For a CCPC at the full limit, the enhanced credit alone is now worth up to $2.1 million per year in refundable credits.
Overview | What Changed
Introduction
The most significant SR&ED reform in a decade is now in effect. The changesannounced through the 2024 Fall Economic Statement and confirmed in Budget2025, C-15, apply to taxation years beginning on or after December 16, 2024, which means 2026 is the first full year most companies plan under the new regime. The headline is simple: the ceiling on the enhanced credit doubled. The implications for capital planning are less simple, and worth understanding precisely.
Data | The New Numbers
The Limits, Side by Side
Under the previous rules, CCPCs earned the enhanced 35% refundable credit on their first $3 million of eligible expenditures, with the limit grinding to zero as taxable capital grew from $10 million to $50 million. Under the new rules, the enhanced rate applies to the first $6 million, and the phase-out runs from $15 million to $75 million of taxable capital, or $15 million to $75 million gross revenue exclusion.In practice: a CCPC spending $6 million on eligible work can now recover up to $2.1 million federally as a refundable credit — before provincial credits are added. Under the old limit, the same company capped out at $1.05 million at the enhanced rate, with the remainder earning only the basic 15% non-refundable credit.
Concept | Who Newly Qualifies
Beyond the CCPC
Three groups gain access they never had. Scaling companies that outgrew the old taxable capital thresholds of 50M are back inside the phase-out range. High capital, low revenue companies can use the new gross revenue test to access the enhanced refundable credit. Eligible Canadian public corporations can now claim the enhanced refundable credit on up to $6 million of expenditures based on the new gross revenue test, removing a long-standing penalty for going public while still deep in R&D.The restoration of capital expenditure eligibility matters most for hardware, manufacturing, and lab-based R&D: equipment purchased for use in eligible work is claimable again, reversing the 2014 exclusion that pushed capital-intensive innovators to structure around leases.
Analysis | What It Means for Planning
The Strategic Read
A doubled limit is not just more room — it changes what is worth documenting. Projects that previously exceeded the enhanced ceiling and earned only 15% on the overflow now justify the same evidentiary rigor across the full spend. Companies near the old thresholds should re-run eligibility they may have written off years ago. And with capital expenditures back in scope, 2026 procurement decisions belong in the SR&ED conversation before purchase orders go out, not at year-end.The compliance side scales too: a larger claim is a larger review target. The CRA's Why-and-How framework applies with the same rigor at $6 million as at $600 thousand — the evidence trail simply has to carry more weight.
Summary | Key Takeaways
Conclusion
The 2026 regime is the strongest SR&ED has been for scaling companies since the program's modern form took shape. The ceiling doubled, the eligibility window widened, and capital equipment returned to scope. The companies that benefit most will be the ones that treat the new limits as a planning input from January — not a discovery in March of the following year.
