Canada's Budget 2025 raised the expenditure limit for the enhanced 35% refundable SR&ED tax credit from $3 million to $6 million of qualifying R&D spending per year (a two-step increase, first to $4.5M then $6M), applying to taxation years beginning on or after December 16, 2024. A qualifying Canadian-controlled private corporation (CCPC) can now claim up to about $2.1 million per year as refundable cash back on eligible R&D. The budget also extended access to the enhanced 35% rate to certain Canadian public corporations.
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SR&ED enhanced 35% refund now covers first $6M of R&D spend
Why this matters for founders
For an incorporated Canadian founder doing product or technical R&D, this roughly doubles the refundable cash you can pull from SR&ED even before turning a profit, since the enhanced credit is refundable from year one. Track eligible salaries, contractor costs, and materials carefully and file the SR&ED claim with your T2 to capture the larger refund.
Source: PwC Canada — Tax Insights: SR&ED updates
SaaS / SoftwareHardware / IoTHealthtechManufacturing #r-and-d-credit#sred#tax-credit#research-development#refundable-credit#taxes#finance#engineering
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