Ottawa Just Doubled Canada's Biggest R&D Incentive — and You Don't Need a Lab Coat to Claim It

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If the phrase "R&D tax credit" makes you think of white lab coats and venture-backed software startups, Ottawa would like a word. This spring, the federal government enacted the largest expansion of the Scientific Research and Experimental Development (SR&ED) program in more than a decade — and much of the work that qualifies happens not in labs, but on shop floors, in commercial kitchens, in dispatch offices, and on job sites. In other words: in exactly the kinds of businesses our members run.

Here's what changed, and why it may be the most overlooked source of growth capital available to a Punjabi-Canadian business owner this year.

The headline: the enhanced credit just doubled

On March 26, 2026, Bill C-15 — the legislation implementing key measures from Budget 2025 — received Royal Assent. For tax years beginning after December 15, 2024, the maximum annual expenditure limit for the enhanced 35% refundable investment tax credit has increased from $3 million to $6 million .

Do the math: 35% of $6 million means a qualifying Canadian-controlled private corporation can now receive up to $2.1 million per year as a refundable credit — money paid out even if the company owes no tax that year. For a growing business, that is not a deduction buried in a tax return; it is working capital.

Two more changes widen the door. The taxable-capital range over which the enhanced credit phases out has been raised from $15 million to $75 million , so mid-sized firms keep access to the 35% rate far longer as they grow. And for the first time, eligible Canadian public corporations can access the enhanced credit too.

Machines count again

For over a decade, SR&ED excluded capital costs — a rule that quietly shut out manufacturers, food processors, and logistics operators whose innovation lives in equipment, not payroll. That's over. Eligible capital expenditures made after December 15, 2024 can now be claimed, and so can qualifying lease costs for equipment used in R&D.

If you bought or leased machinery to develop a new production process — a new packaging line you had to reconfigure and test, custom fabrication tooling, equipment for trialling a new food formulation — some of that spend may now generate credits it couldn't have two years ago.

You may already be doing "R&D" without calling it that

SR&ED rewards systematic work undertaken to resolve technological uncertainty — attempts to achieve something where the outcome wasn't knowable in advance. Across our community's core sectors, that describes more day-to-day problem-solving than most owners realize. A trucking company building custom dispatch or route-optimization software because nothing off the shelf handled its lanes. A food processor reformulating a product for longer shelf life without preservatives. A construction firm testing a new assembly method or material combination. A manufacturer iterating on tooling to hit a tolerance its equipment supposedly couldn't achieve.

A word of honesty, because credibility matters more than hype: routine upgrades, cosmetic changes, and simply buying new technology do not qualify. The work must be experimental, and you must document what you tried, what failed, and what you learned. Good records are the difference between a strong claim and a painful review.

New for 2026: know before you spend

The most practical change for smaller firms may be administrative. On April 1, 2026, the CRA launched an optional pre-claim approval process : businesses with annual gross income under $25 million can ask the CRA to confirm — before work begins — whether a planned project qualifies. You get a determination within eight weeks , can submit up to three projects , and an approval stays valid for up to three years. For approved projects, expenditure-review processing time is cut from 180 days to 90 days .

For a family business weighing whether a risky improvement project is affordable, that early certainty changes the calculus entirely.

Key takeaways

The enhanced 35% refundable SR&ED credit now applies to up to $6 million in annual expenditures — up to $2.1 million per year in refundable credits.

Equipment and lease costs acquired after December 15, 2024 are back on the table — a major shift for manufacturing, food processing, and logistics.

Businesses under $25 million in gross income can get CRA pre-approval within eight weeks before spending a dollar.

Documentation is everything. Start a simple project log now, before your next improvement project begins.

If any of the examples above sounded like your business, the next step isn't paperwork — it's a conversation. Bring the question to one of our monthly socials and compare notes with members who have been through a claim; you'll find the full events calendar here . Sometimes the most valuable capital in the room is someone else's experience.

This post is general information only and does not constitute professional, legal, tax, or financial advice. Consult a qualified advisor about your specific situation.

Sources

SR&ED news and updates — Canada Revenue Agency

Bill C-15 — Royal Assent, Parliament of Canada

Budget 2025, Chapter 1 — Government of Canada

CRA tax tip: SR&ED Pre-claim approval process launch (April 8, 2026)

How to apply for pre-claim approval — CRA

KPMG: Canada's SR&ED program enters a new era (Feb 2026)