Budget 2026: SR&ED

Budget 2026 proposes to further expand the SR&ED tax incentive program to include certain commercialisation expenses. Eligible expenditures would be expanded to include certain costs associated with bringing a new product or process to market, including obtaining necessary regulatory approvals or certifications, and securing and maintaining intellectual property protection. This measure would apply to expenditures incurred in taxation years that begin on or after Budget Day. This measure is expected to provide support of $930 million over five years, with $235 million ongoing.

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Budget 2026 proposes to further expand the SR&ED tax incentive program to include certain commercialisation expenses. Eligible expenditures would be expanded to include certain costs associated with bringing a new product or process to market, including obtaining necessary regulatory approvals or certifications, and securing and maintaining intellectual property protection. This measure would apply to expenditures incurred in taxation years that begin on or after Budget Day. This measure is expected to provide support of $930 million over five years, with $235 million ongoing.

Budget 2026 - Masters of our Destiny · PDF p. 127

The expanded scope of eligible activities would include tests, technological validations, and studies conducted to meet regulatory requirements for obtaining the initial approval or certification necessary to commercialize a product or process. To be eligible, these activities would need to directly relate to a project that is eligible under the SR&ED program’s existing rules.

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The expanded scope of eligible activities would include tests, technological validations, and studies conducted to meet regulatory requirements for obtaining the initial approval or certification necessary to commercialize a product or process. To be eligible, these activities would need to directly relate to a project that is eligible under the SR&ED program’s existing rules.

Budget 2026 - Masters of our Destiny · PDF p. 420

Eligible expenditures would be expanded to include costs related to the registration and maintenance of intellectual property (IP) protection in respect of IP developed in the course of conducting a project that is eligible under the existing scope of activities under the SR&ED program.

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Eligible expenditures would be expanded to include costs related to the registration and maintenance of intellectual property (IP) protection in respect of IP developed in the course of conducting a project that is eligible under the existing scope of activities under the SR&ED program.

Budget 2026 - Masters of our Destiny · PDF p. 420

While administrative fees payable to an IP office outside Canada would be eligible, costs of supporting activities, such as those in respect of preparing an application, would be eligible only if those activities are conducted in Canada. In the event that a taxpayer disposes of IP in respect of which SR&ED support was provided for IP protection costs, recapture rules would apply in respect of the related SR&ED deduction and investment tax credit amounts.

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While administrative fees payable to an IP office outside Canada would be eligible, costs of supporting activities, such as those in respect of preparing an application, would be eligible only if those activities are conducted in Canada. In the event that a taxpayer disposes of IP in respect of which SR&ED support was provided for IP protection costs, recapture rules would apply in respect of the related SR&ED deduction and investment tax credit amounts.

Budget 2026 - Masters of our Destiny · PDF p. 421

In addition, the Canada Revenue Agency will work to provide sector-specific guidance to clarify SR&ED eligibility as it pertains to commercialisation expenses.

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In addition, the Canada Revenue Agency will work to provide sector-specific guidance to clarify SR&ED eligibility as it pertains to commercialisation expenses.

Budget 2026 - Masters of our Destiny · PDF p. 127

The tax credit is provided at an enhanced rate of 35 per cent for certain small- and medium-sized corporations. A general rate of 15 per cent is available for qualified SR&ED expenditures that do not qualify for the enhanced rate.

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The tax credit is provided at an enhanced rate of 35 per cent for certain small- and medium-sized corporations. A general rate of 15 per cent is available for qualified SR&ED expenditures that do not qualify for the enhanced rate.

Budget 2026 - Masters of our Destiny · PDF p. 420

Last year, we enhanced and simplified the Scientific Research and Experimental Development (SR&ED) tax incentive program by expanding access to the enhanced credit, restoring support for capital expenditures, and increasing the annual eligible expenditure limit on which the enhanced credit can be earned to $6 million

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Last year, we enhanced and simplified the Scientific Research and Experimental Development (SR&ED) tax incentive program by expanding access to the enhanced credit, restoring support for capital expenditures, and increasing the annual eligible expenditure limit on which the enhanced credit can be earned to $6 million

Budget 2026 - Masters of our Destiny · PDF p. 127