SR&ED expenditure limit 2026: what changed and what it means for your claim
The SR&ED expenditure limit is now $6 million, up from $3 million, for tax years beginning after December 15, 2024. Spending under the limit earns the enhanced 35% credit, so the maximum enhanced credit is $2.1 million a year. Bill C-15 made this law on March 26, 2026. It also widened the phase-out, opened the credit to some public companies and restored capital spending.
If a page still says $3 million, it's out of date. The $3 million limit applies only to tax years that began before December 16, 2024. The $4.5 million figure you may also see was a 2024 proposal that Budget 2025 replaced before it became law.
This is an independent guide. ClearSRED is not affiliated with the Canada Revenue Agency. It covers the federal credit only; for provincial credits, see provincial SR&ED tax credits.
What changed in the SR&ED program? (before and after, as of October 2026)
Here is every Bill C-15 change that affects how much you can claim, with the official source for each row.
| Rule | Before (tax years beginning before 2024-12-16) | Now (tax years beginning after 2024-12-15) | Source |
|---|---|---|---|
| Enhanced expenditure limit | $3 million | $6 million (the $4.5 million proposal from the 2024 Fall Economic Statement was never enacted) | CRA ITC policy |
| Maximum enhanced credit (35% of limit) | $1.05 million | $2.1 million | CRA ITC policy |
| Taxable capital phase-out (CCPCs) | $10 million to $50 million | $15 million to $75 million | CRA ITC policy |
| Revenue-based phase-out | Not available | CCPCs may elect a test on average annual revenue, $15 million to $75 million | CRA ITC policy |
| Public companies | 15% non-refundable only | Eligible Canadian public corporations (ECPCs) get the 35% credit on up to $6 million; phase-out on 3-year average revenue, $15 million to $75 million | CRA ITC policy |
| Capital expenditures | Not eligible (since 2014) | Eligible again for property acquired after December 15, 2024 | CRA SR&ED updates |
| Enhanced rate / basic rate | 35% / 15% | 35% / 15% (unchanged) | CRA ITC policy |
| Legal status | Proposals (FES 2024, Budget 2025) | Law: Bill C-15, Royal Assent March 26, 2026 (S.C. 2026, c. 3) | LEGISinfo: C-15 |
Which tax years get the $6 million limit?
Any tax year that begins on or after December 16, 2024. The date is when the year starts, not when it ends or when you file.
Both steps used this same start date. The 2024 Fall Economic Statement proposed $4.5 million for tax years beginning on or after December 16, 2024. Budget 2025 then raised it to $6 million for the same years. So no year was ever taxed at $4.5 million.
For example, a company with a calendar year gets $6 million for 2025. A company whose year ran December 1, 2024 to November 30, 2025 still uses $3 million for that year, because it began before December 16, 2024. Its next year gets $6 million. Capital is different: it depends on when the property was acquired (after December 15, 2024), not when the year began.
Short tax years (under 51 weeks) get a prorated limit, based on days in the year divided by 365.
How does the taxable capital phase-out work?
The limit shrinks in a straight line as the previous year's taxable capital employed in Canada (counting associated corporations) rises from $15 million to $75 million. Above $75 million it is nil.
As a rough guide, a CCPC with $20 million of taxable capital now has a limit of about $5.5 million. Under the old rules, the same company would have had about $2.25 million. If your revenue is low but your balance sheet is large (after a big equity round, say), you can elect the revenue-based test instead. The election is made on a prescribed form, and all associated CCPCs in the group must make it jointly. The CRA says a separate schedule for allocating the limit under this method will be released in fall 2026.
ECPCs always use revenue: the average of the last 3 fiscal years, measured across the consolidated group. To qualify as an ECPC, a corporation must be a Canadian-resident public corporation that is not controlled by non-residents. Subsidiaries at least 90% owned by ECPCs can also qualify.
Are SR&ED credits refundable?
Yes for most private Canadian companies and, now, for eligible public ones. No for other corporations. The table shows how much of each credit comes back as cash, according to the CRA's ITC policy.
| Claimant | 35% credit, current spending | 35% credit, capital | 15% credit above the limit |
|---|---|---|---|
| Qualifying CCPC | 100% | 40% | 40% |
| Other CCPC with a limit | 100% | 40% | 0% |
| ECPC | 100% | 40% | 0% |
| Other corporations | 15% only, non-refundable | ||
Credits you don't get back in cash reduce federal tax payable. Unused credits can be carried back 3 years or forward 20 years.
Do associated companies share the $6 million limit?
Yes. A group of associated corporations gets one $6 million limit, not one each. The members agree how to split it and file that agreement (Schedule 49 for CCPCs). A member can't be allocated more than its own limit.
Don't skip the agreement. Without it, the CRA can treat the limit as nil. If you don't file one within 30 days of a CRA request, the CRA can allocate the limit for you. ECPC groups share one limit across the consolidated group in the same way.
Worked example: how much more does the new limit pay?
Fictional example. "Kestrel Sensor Systems Inc." is made up for illustration. It is a qualifying CCPC with a calendar tax year, under $15 million of taxable capital and no associated companies. In 2025 it has $5 million of qualified current SR&ED spending.
| Old rules ($3M limit) | New rules ($6M limit) | |
|---|---|---|
| Spending at 35% | $3,000,000 → $1,050,000 | $5,000,000 → $1,750,000 |
| Spending at 15% | $2,000,000 → $300,000 | None |
| Total federal credit | $1,350,000 | $1,750,000 |
| Cash refund | $1,050,000 + 40% of $300,000 = $1,170,000 | $1,750,000 |
| Non-refundable, carried forward | $180,000 | None |
The total credit rises by $400,000, and the cash refund by $580,000. For a company that isn't yet taxable, that cash is what matters. To run your own numbers, try the SR&ED calculator.
Claiming above $3 million for the first time?
We prepare your T661 and Schedule 31 from your own engineering records, including the new capital and limit-sharing lines, and an experienced SR&ED reviewer checks every claim.
Contact usWhat else changed for SR&ED in 2026?
Budget 2025 also announced administrative changes, effective April 1, 2026.
- Elective pre-claim approval. It launched April 1, 2026. Businesses with gross income under $25 million can ask for technical approval of planned projects and get a decision within 8 weeks. See pre-claim approval.
- Faster expenditure reviews. CRA says refundable claims where every project has pre-claim approval and that are selected for review get a 90-day financial review standard, instead of 180 days (CRA).
- More use of AI at the CRA. Budget 2025 said the CRA would use more artificial intelligence so low-risk claims avoid unnecessary audits, and would consult on Form T661. The CRA has not published details of how this works.
- Updated forms. The CRA released new versions of T661, Schedule 31 and Schedule 49 in May 2026. T661 now has lines for capital property and for pre-claim approval case numbers.
Filing steps and deadlines are in how to file an SR&ED claim.
- CRA: Investment Tax Credit Policy (modified 2026-10-07)
- CRA: SR&ED program updates
- Parliament of Canada, LEGISinfo: Bill C-15, Budget 2025 Implementation Act, No. 1
- Finance Canada: Legislation passes to implement Budget 2025 (2026-03-26)
- Budget 2025: Tax measures, supplementary information (Enhanced Credit Expenditure Limit)
- Budget 2025, Chapter 1 (SR&ED administrative changes)
- Finance Canada: Reforming and enhancing the SR&ED program (2024-12-13)
- CRA: Apply for pre-claim approval