Budget 2025 – SR&ED Highlights
Budget 2025 brings major enhancements to the SR&ED program, including a higher refundable limit, reinstated capital expenditures, and expanded eligibility for public corporations.
The 2025 federal budget brings significant enhancements to Canada's SR&ED program, offering expanded opportunities for innovative companies to claim tax credits for their research and development activities. Here's what you need to know about the changes and how they might benefit your business.
Higher Refundable Limit for CCPCs
The enhanced 35% SR&ED credit now applies to up to $6 million in eligible expenditures, a substantial increase from the previously announced $4.5 million threshold. This change applies to taxation years starting on or after December 16, 2024, giving Canadian-Controlled Private Corporations (CCPCs) greater access to refundable tax credits that can directly support cash flow and reinvestment in innovation.
Capital Expenditures Reinstated
In a major shift, planned legislative changes will restore capital asset eligibility for SR&ED claims. This reinstatement is particularly significant for equipment-heavy sectors like biotechnology and advanced manufacturing, where substantial capital investments in specialized equipment are essential for research and development activities. Companies that have been hesitant to make major equipment purchases may now find these investments more financially viable with SR&ED support.
Support Extended Beyond Private Companies
Enhanced SR&ED incentives are expected to expand access for eligible public corporations, broadening the program's reach beyond CCPCs. This extension signals the federal government's commitment to supporting innovation across all types of Canadian businesses, regardless of their corporate structure or size.
Greater Focus on Innovation and Productivity
These changes signal a continued federal commitment to deep-tech development and commercialization. By increasing the financial support available through SR&ED, the government is positioning Canada to be more competitive in attracting and retaining innovative companies working on cutting-edge technologies.
What Founders Should Do Now
To maximize the benefits of these enhanced SR&ED provisions, business owners should consider the following strategic actions:
- Plan fiscal year-starts strategically to fully access the higher refundable threshold of $6 million
- Re-evaluate capital purchases and technology investments that could now qualify under the reinstated capital expenditure provisions
- Stay aligned with legislation rollout and ensure your documentation meets the updated requirements
- Review current and planned R&D activities to identify opportunities that may now be eligible or more valuable under the enhanced program
Looking Ahead
Budget 2025's SR&ED enhancements represent the most significant expansion of the program in recent years. For companies engaged in research and development, these changes create new opportunities to access government support for innovation. As the detailed legislation is rolled out, staying informed and working with SR&ED specialists or tools like Shredy can help ensure you capture the full value of these enhanced incentives.
Whether you're a biotech startup investing in specialized equipment, a manufacturing company developing new processes, or a technology firm pushing the boundaries of innovation, the enhanced SR&ED program offers more support than ever before. Now is the time to review your R&D strategy and ensure you're positioned to take full advantage of these improvements.