SR&ED tax credit program significantly enhanced as Bill C-15 passes

Expanded access for CCPCs to 35% refundable tax credit.

• Increased annual expenditure limit and taxable capital phase-out thresholds for the enhanced 35% credit:
  • Access to the refundable ITC is reduced as the size of the associated group of CCPCs grows. Size is measured by taxable capital. The threshold amount of taxable capital at which the refundable ITC will be reduced will be increased to $15 million from $10 million, and the taxable capital limit at which the refundable ITC is eliminated is increased to $75 million from $50 million.  
  • Maximum refundable tax credits will be increased to $2.1 million (up from $1.05 million) by increasing the annual enhanced expenditure limit for an associated group of CCPCs from $3 million to $6 million.
• CCPCs will have the option to elect a gross revenue limitation instead of the taxable capital limitation, similar to the calculation described and used to expand the program to smaller Canadian public companies (see point 2). This will benefit early-stage companies that may be adding capital assets but are not yet generating significant revenue.

These changes expand the range of Canadian corporations that qualify for the 35% refundable rate under the SR&ED program. With an increased expenditure limit ($6 million), revised taxable capital limits, and the option to use a revenue-based calculation, more CCPCs will be able to access the refundable ITC rate and benefit from an increase in refundable tax credits. 

Canadian public corporations may be eligible to receive the 35% refundable tax credit.

SR&ED refundable tax credit eligibility has been expanded to include ECPCs and their subsidiaries, which means a much broader range of companies will be able to benefit from the 35% refundable tax credit rate on up to $6 million of qualifying research and development expenditures each year. This change significantly boosts the potential cash flow for public companies, which previously could only access the lower, 15% non-refundable rate.  

An eligible Canadian public corporation is one that, throughout the taxation year, must satisfy the below requirements: 

• Be a Canadian resident.  
• Be a public corporation listed on a designated stock exchange. 
• Not be controlled, directly or indirectly in any manner, by one or more non-resident persons.

New gross revenue calculation option for enhanced expenditure limit 

New legislation introduces a gross revenue expenditure limit structure to calculate the enhanced ITC rate. The annual expenditure limit will gradually be reduced if the ECPC’s average gross revenue over the three preceding tax years exceeds $15 million. The limit is fully eliminated when the ECPC’s average gross revenue reaches $75 million. This calculation also applies to CCPCs who wish to elect this method. 

In determining the limits, gross revenue will be the amount reported in the corporation's annual financial statements, prepared in accordance with generally accepted accounting principles, that are presented to shareholders. For members of a corporate group that prepares consolidated financial statements, gross revenue will be the amount reported in the group’s annual financial statements presented to shareholders at the highest level of consolidation. Members of a corporate group for financial reporting purposes will be required to share access to the enhanced SR&ED ITC's expenditure limit. 

By linking eligibility to average gross revenue over the past three years, the updated rules encourage consistent investment in innovation and level the playing field, making the program more accessible and advantageous for both Canadian private and public corporations alike.  

Capital expenditures will be re-introduced to the SR&ED program.

Qualifying capital expenditures, including certain lease costs, are eligible for the SR&ED tax credit and will become part of the eligible expenditures pool. This means they can be deducted all in one year, mirroring the rules that were retracted in 2014. Qualifying capital expenditures include purchases that:

• use all or substantially all (i.e. 90% or more) of the operating time in their expected useful life in the performance of SR&ED in Canada; and
• consume all or substantially all of their value in the performance of SR&ED in Canada.   

Equipment with intended use for SR&ED and non-SR&ED activities will have additional documentation required for the claim. 

The reinstatement of capital expenditure eligibility will allow businesses to benefit from the SR&ED tax credit on a broader range of investments, reversing previous restrictions.

The information in this publication is current as of April 8, 2026.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.