Key Enhancements for 2024 and 2025
If your company performs R&D in Canada, these structural changes could drastically improve your cash flow and net return on innovation investments.
1. Increased Expenditure Limits for CCPCs
The most substantial change for Canadian-Controlled Private Corporations (CCPCs) is the massive increase in the annual expenditure limit eligible for the enhanced 35% refundable Investment Tax Credit (ITC). Previously capped at $3 million, this limit has been raised to $6 million. This expansion allows qualifying CCPCs to claim up to $2.1 million in refundable credits annually, effectively doubling the cash-flow potential for R&D-intensive businesses.
2. The Return of Capital Expenditures
Reversing a restrictive policy implemented in 2012/2014, capital expenditures are once again eligible for both deductions against income and investment tax credits under the SR&ED program. This applies to property acquired (or lease costs incurred) on or after December 16, 2024. For companies investing in expensive R&D lab equipment, prototyping machinery, or specialized testing apparatuses, this is a monumental capital recovery opportunity.
3. Expanded Eligibility to Public Corporations
For the primary time, “eligible Canadian public corporations” (ECPCs) can now qualify for the enhanced 35% refundable tax credit, rather than being restricted to the standard 15% non-refundable rate. ECPCs can access this enhanced rate on up to $6 million of qualifying SR&ED expenditures annually, subject to phase-out mechanisms based on average gross revenue.
Strategic Takeaways for Canadian Founders
These enhancements underscore the government’s commitment to retaining IP and deep-tech manufacturing within Canada. Given that the CRA is also rolling out AI-supported risk screening to accelerate low-risk claims, preparing robust, contemporaneous technical documentation is more critical than ever.
Canadian Funding Partners helps businesses identify funding opportunities and coordinate applications with specialist partner firms. Where a file requires accounting or engineering expertise, the work is handled by appropriately qualified professionals at our partner firms. Book a consultation today to map your R&D pipeline against the new framework.
Frequently asked questions
What is the federal SR&ED credit rate?
A Canadian-controlled private corporation can earn a 35% refundable investment tax credit on its first $3 million of qualified SR&ED expenditures; the rate is 15% above that limit and for other corporations.
Who reviews an SR&ED claim?
The Canada Revenue Agency administers the program and may review both the technical eligibility of the work and the expenditures claimed.
What documentation supports a claim?
Contemporaneous records of the experimental work — design notes, test results, version histories, time records and project meeting notes — recorded as the work happens rather than reconstructed later.