ARTICLE | May 22, 2026
What is the SR&ED Tax Credit?
The Scientific Research and Experimental Development (SR&ED) tax incentive (“SR&ED program”) is Canada’s largest non-dilutive source of innovation funding, supporting over 23,000 claimants and returning approximately $4.5 billion annually to Canadian businesses. The program is designed to encourage businesses to conduct research and development (R&D) by supporting technical work aimed at developing or improving materials, devices, products, or processes.
While the SR&ED program has existed in some form since the 1980s, it has continued to evolve through legislative updates that have strengthened the program and increased its accessibility. Most recently, changes introduced in the 2025 Federal Budget are expected to expand eligibility and enhance the level of support available, positioning SR&ED to play an even greater role in driving business-led innovation.
How the SR&ED Program Works
The SR&ED program allows businesses to recover a portion of their R&D costs after eligible work has been completed. Businesses carry out work that involves technical challenges, track the associated costs, and then submit a claim to receive a refund or tax credit.
To qualify, the work being performed must meet the following criteria:
- Technological uncertainty: The work involves a problem where it is not known, using existing knowledge or standard methods, whether the desired result can be achieved or how to achieve it.
- Systematic investigation: The work follows a structured experimental process, including forming hypotheses, designing and performing tests or analyses, evaluating results, and iterating based on evidence.
- Technological advancement: The work generates new scientific or technological knowledge or improves understanding or capability beyond what was known at the start, even if the desired outcome is not fully achieved. Successful resolution of uncertainty is not required for SR&ED eligibility.
Eligible costs related to this work can then be claimed, including salaries and wages, materials, subcontractor and contractor costs, overhead, and certain third-party payments.
Once submitted, the claim is reviewed and incentives are provided through Investment Tax Credits (ITCs), either as a cash refund or as a reduction in taxes payable, depending on the business’s structure.
What’s New: Changes to the SR&ED Program
The SR&ED program is changing for taxation years beginning on or after December 16, 2024, which will impact claims filed in 2026. These updates represent the most significant changes to the program in over a decade and are driven by the 2025 Federal Budget.
Several important changes are being introduced:
- The enhanced 35% refundable credit will apply to a larger portion of eligible spending, increasing the level of support available.
- Eligibility is expanding beyond Canadian-controlled private corporations (CCPCs) to include certain Canadian public companies.
- The limits used to determine eligibility are being expanded, allowing growing and mid-sized companies to continue accessing support as they scale.
In addition, capital expenditures are being reintroduced as an eligible expense for capital property acquired after December 15, 2024. This means certain costs related to equipment, machinery, and testing infrastructure used in R&D may now qualify again.
These changes can have a meaningful impact. For example, an eligible Canadian public company previously limited to a non-refundable credit may have received approximately $900K in tax savings on $6 million of R&D spending. Under the new rules, that same level of activity could generate up to $2.1 million in refundable federal support, along with additional provincial incentives depending on the company’s location.
Overall, these updates increase access to funding and make the program more relevant for a broader range of businesses, particularly those investing in large-scale or capital-intensive development activities.
For more information on these changes please refer to the supplementary material.
Why Northern Ontario Businesses are Well Positioned
As a Northern Ontario business, many companies are already well positioned to benefit from the SR&ED program, particularly those operating in mining, engineering, and related technical fields.
Across the region, work often involves improving existing equipment, adapting technologies, and solving practical challenges in day-to-day operations. For example, companies are refining automation systems, developing sensor technologies, and improving digital mining tools directly within active sites. Mines are also being modernized through electrification, including battery-electric equipment and supporting infrastructure.
This type of work is not always entirely new, but it often involves testing, refinement, and problem-solving, which may be eligible under the SR&ED program.
Start Your SR&ED Conversation Today
If your business is conducting research and development work, you may already be sitting on a significant and unclaimed tax credit. At FCR, our Government Incentives team works with businesses across Northern Ontario to identify eligible SR&ED activities, prepare well-documented claims, and navigate the CRA process with confidence. As FCR’s Government Incentives Lead, I work directly with clients to assess eligibility, develop a SR&ED strategy, and ensure that R&D activities are captured in your tax filing. Whether you are new to SR&ED or looking to strengthen an existing claim, I would be glad to start that conversation.
Let’s Talk!
Call us at 1 855 363 3526 or fill out the form below and we’ll contact you to discuss your specific situation.