Legislative update · Bill C-15 · In force 26 March 2026

Canada's $4.6 billion R&D credit just got its biggest expansion in decades

Bill C-15 doubled the enhanced expenditure limit to $6 million, opened refundable credits to public corporations, brought capital expenditures back, and cut CRA processing from 180 days to a 90 day target.

Our job is to maximize the dollars you get back, while minimizing the time your technical staff spend getting them.

  • $4.6B in SR&ED credits allowed for the year ended 31 March 2026, up roughly 50% since 2022.
  • up to ~64% of eligible experimental development salary recoverable as cash by a B.C. CCPC, federal and provincial combined.
  • $2.1M maximum annual refundable credit, doubled from $1.05M.

Recovery figure assumes an eligible CCPC using the prescribed proxy method, combining the 35% federal refundable ITC with the 10% B.C. refundable credit. Actual recovery depends on corporate status, province, and expenditure mix.

✓ Effective for taxation years beginning on or after Dec 16, 2024 See what changed Talk to a specialist
$2.1M
Max annual refundable credit
↑ from $1.05M
35%
Enhanced credit rate
now open to ECPCs
$6M
Expenditure limit
↑ from $3M
$75M
Phase-out upper threshold
↑ from $50M
90 days
Pre-claim approval window
fast-track processing
What we do

SR&ED, handled properly

Two specialists — one a former CRA financial reviewer and PwC national practice senior manager, the other a repeat technology founder. We work the legislation, not a template.

Filing of amended tax returns

Recovering credits from prior years where claims were missed, understated, or filed without the technical narrative to support them.

SR&ED documentation

Technical narratives that hold up under review — written to the eligibility framework the CRA actually applies, not the one people assume.

SR&ED costing

Building the expenditure claim: salaries, materials, contractors, overhead, and — newly relevant again — capital.

Bill C-15 · five major changes

What actually changed

Each change below is tagged with the provision that governs it, so you or your CPA can go straight to the source.

Change 01 ITA §127(10.1) Expenditure limit formula

Doubling the enhanced credit expenditure limit

The cap on R&D spending eligible for the lucrative 35% refundable tax credit has doubled. Qualifying businesses can now receive up to $2.1 million annually in cash-back refundable credits before any remaining expenses drop to the basic 15% non-refundable rate.

The increase was staged: the 2024 Fall Economic Statement first raised the limit from $3M to $4.5M, and Budget 2025 further increased it to $6M — effective for taxation years beginning on or after December 16, 2024.

$3M limit → max $1.05M cash back → $6M limit → max $2.1M cash back
Change 02 ITA §127(9)
ITA §127.1(1) ECPC definition & refund mechanism

Public corporations gain access to refundable credits

In a historic shift, the enhanced 35% refundable credit is no longer strictly reserved for CCPCs. Certain Eligible Canadian Public Corporations (ECPCs) can now tap into the same enhanced refundable credit on up to $6 million in qualifying expenditures.

This directly addresses the "going public penalty" — where high-growth innovators in clean tech, AI, and life sciences were heavily penalized on their R&D funding the moment they went public to raise capital.

Enhanced credit: CCPCs only → ECPCs now eligible too
Change 03 ITA §127(10.1) Taxable capital & gross revenue phase-out ranges

Raised phase-out thresholds for scaling companies

Previously, as a CCPC grew its capital or attracted significant investment, its access to the 35% cash-back rate quickly clawed back to zero. The new rules widen these boundaries significantly for both CCPCs and ECPCs.

CCPCs can now elect to use a three-year average gross revenue metric instead of taxable capital — offering major flexibility to capital-heavy, pre-revenue hardware and tech firms. ECPCs are required to use the revenue method.

Taxable capital phase-out: $10M–$50M → New taxable capital: $15M–$75M Note — gross revenue option: $15M–$75M (CCPC elect / ECPC required)
Change 04 Property acquired
on or after
Dec 16, 2024 Capital expenditure eligibility

Reinstatement of capital expenditures

Reversing an exclusion in place since 2014, capital expenditures are officially eligible again for SR&ED claims. Companies can once again claim equipment and hardware — including R&D lab testing equipment, specialized prototyping machinery, advanced tools, and cloud infrastructure — used 90% or more of the time for Canadian experimentation.

Note on refundability: Unlike current expenditures (like R&D salaries) which are 100% refundable up to the cap, the ITC earned on capital expenditures is partially refundable at up to 40%. Recapture rules apply on disposition.

Capital excluded since 2014 → Re-eligible from Dec 16, 2024 Note — ITC on capex: up to 40% refundable
Change 05 CRA process Pre-claim approval launched April 1, 2026

Major administrative modernization

The CRA has rolled out substantial administrative updates to speed up cash flow and reduce the "audit anxiety" historically associated with SR&ED claims.

An optional pre-claim approval process — launched April 1, 2026 — allows businesses to submit their project scope to the CRA before incurring costs to receive a binding technical confirmation on eligibility. Projects going through this process are fast-tracked for a 90-day processing window once the tax return is filed. The CRA is also integrating AI risk-modelling to flag clear-cut, low-risk claims for immediate approval.

Pre-claim approval: binding upfront eligibility confirmation Note — AI-assisted risk assessment for low-risk claims
Schedule of amendments

Before and after, at a glance

Every parameter that moved, in one place.

ParameterBeforeAfter (Bill C-15)
Enhanced credit expenditure limit$3,000,000$6,000,000
Max annual refundable cash credit$1,050,000$2,100,000
Enhanced 35% credit eligibilityCCPCs onlyCCPCs + eligible ECPCs
Basic (non-refundable) rate15%15% (unchanged)
Taxable capital phase-out begins$10,000,000$15,000,000
Taxable capital phase-out ends$50,000,000$75,000,000
Gross revenue phase-out optionNot available$15M–$75M (CCPC elect / ECPC required)
Capital expenditure eligibilityExcluded (2014)Reinstated (Dec 16, 2024+)
Capital ITC refundabilityN/AUp to 40% refundable
Pre-claim approval processNot availableAvailable (April 1, 2026)
Processing window (pre-approved)Highly variable90-day target
ITA §127(9)

Do you qualify as an ECPC?

Three criteria, and a phase-out that runs on revenue rather than taxable capital.

  • 01 Resident in Canada Must be a taxable Canadian corporation resident in Canada for the given taxation year.
  • 02 Publicly traded Must meet the definition of a "public corporation" under §89(1), meaning its shares are listed on a designated stock exchange.
  • 03 Not foreign controlled Cannot be controlled, directly or indirectly in any manner, by one or more non-resident persons.

ECPC phase-out: 3-year average gross revenue

The $6M expenditure limit reduces on a straight-line basis as average gross revenue moves from $15M to $75M. Above $75M, the limit reaches zero and only the basic 15% non-refundable ITC applies.

$0$15M$75M
Full 35% refundable credit on up to $6M
Limit reduces pro rata across the range
Basic 15% non-refundable ITC only
Primary law

Where to find this in the Income Tax Act

The four provisions that carry the whole framework.

ITA §127(9)
Definition of "Eligible Canadian Public Corporation" (ECPC)

Formal statutory definition. A corporation qualifies if it is resident in Canada, publicly traded on a designated stock exchange (per §89(1)), and not controlled directly or indirectly by non-resident persons.

ITA §127(10.1)
Expenditure limit & phase-out formulas

Governs how much R&D spending qualifies for the 35% rate. For ECPCs, phase-out is based on 3-year average gross revenue ($15M–$75M). CCPCs may elect gross revenue instead of taxable capital.

ITA §127.1(1)
Refundable investment tax credit

Transforms an earned credit into a cash refund when no taxes are owing. Amended to explicitly include ECPCs alongside CCPCs.

ITA §89(1)
"Public corporation" base definition

Defines what constitutes a public corporation — referenced in the ECPC definition in §127(9). Shares must be listed on a designated stock exchange.

CRA process

Administrative modernization

Faster cash, and far less guessing about eligibility after the fact.

Optional

Pre-claim approval

Submit your project scope before spending to get a binding CRA confirmation that your work qualifies. Eliminates retroactive eligibility uncertainty. Launched April 1, 2026.

90-day target

Fast-track processing

Pre-approved projects are processed within 90 days of filing the tax return — dramatically reducing the traditional wait for cash refunds.

Automated

AI-driven risk assessment

CRA is integrating AI risk-modelling to auto-approve clear-cut, low-risk claims — eliminating redundant paperwork and human review for straightforward files.

Outcome

Faster cash flow for R&D

The combination of pre-approval and accelerated timelines means businesses can plan R&D investment with greater certainty and access refunds faster.

Understanding SR&ED

Short explainers

The conceptual framework we're asked to use has changed over the years. The underlying legislation largely hasn't. These cover the distinction.

What is SR&ED

What Canada's SR&ED tax credit program is all about.

SR&ED: what isn't eligible?

What emerges is that the words used leave a great deal of room for interpretation.

What is SR&ED support work?

A quick look at eligible support work for the SR&ED tax credit program in Canada.

Evolution of SR&ED

How claimants and the CRA look at eligibility — and why the conceptual framework moved while the legislation didn't.

SR&ED for startups

Where early-stage companies find credits — and where they routinely leave them behind.

Budget 2025: SR&ED isn't just for startups

Why the Bill C-15 changes matter well beyond the early-stage crowd.

Reference deck

Understanding SR&ED

Written for practitioners who need to advise on SR&ED without specializing in it. Read it here, or get in touch if you'd like to walk through a specific file.

Who you'll work with

Two people, both of whom answer the phone

No account managers, no handoffs. You talk to the person doing the work.

Rob Farrow
Co-founder / Director
SBA

Rob Farrow

Rob has been active in the tech community since 1987, when he worked as a financial reviewer with CRA's fledgling Scientific Research & Experimental Development Program in Victoria, BC.

He later served as a manager and then senior manager with PwC's National SR&ED Practice in Vancouver from 2005 to 2010.

Tom Mitchell
Co-founder / Director
Degree in Engineering · Previously a P.Eng.

Tom Mitchell

Tom has been Founder, Chair, CEO, CTO, COO, and VP of a number of technology start-ups and early stage companies, and is well versed with government incentive programs such as SR&ED.