The Biggest SR&ED Update in a Decade: What Your Business Needs to Know

For a program that’s been relatively unchanged but reliable for generations, the new playbook has just dropped, and it’s marking a turning point for Canadian innovation.  

Released for August 2025, the Scientific Research and Experimental Development (SR&ED) draft legislation marks the most substantial update to the SR&ED program in more than a decade.  

These changes introduce new eligibility for small public companies, bring back capital expenditure eligibility, raise expenditure limits, and modernize expenditure limits; all aimed at aligning the SR&ED program with the needs of Canada’s dynamic innovation-focused businesses, especially considering the critical need for productivity improving technologies, including artificial intelligence (AI), data centers, and other emergent technologies.  

With new and existing SR&ED clients poised to benefit from these changes, this news comes as a defining moment for corporate research and development (R&D) funding in Canada. In this blog, we break down the key changes, what they mean for Canadian businesses, and how private and public companies can now access a greater strategic advantage through SR&ED. 

“The SR&ED program has fueled Canada’s innovation ecosystem for many years, and this major draft legislation announced in August 2025 improves access to the program to support the era of AI and cloud computing and opens doors for industries in Canada previously unable to benefit from the SR&ED incentive because of their legal structure.”  
– David Douglas, Principal SR&ED Practice Leader, Ryan  

SR&ED Program Changes and Why They Matter 

First introduced in the Federal Fall Economic Statement released in December 2024, the standout change is the return of the capital asset expenditures eliminated under earlier rule changes. For businesses investing in capital items on a dedicated or shared-use basis, including computer hardware and leases related to cloud compute, these expenses can once again count toward SR&ED claims. 

Moreover, the introduction of an annual revenue test for small public corporations and by election CCPC’s signals a dramatic shift to the SR&ED program. By setting thresholds (an average revenue of $15 to $75 million over the past three years), for the first time ever, the SR&ED program now welcomes small to mid-sized public firms that were historically unable to realize the benefits of the program.  

Truly one of the biggest changes is the SR&ED program opening eligibility to include Canadian public companies in industries previously unable to access the benefits of the SR&ED program such as early-stage mining, oil and gas, and venture and private equity funded companies.  

Additionally, by increasing the expenditure limit of the enhanced 35% tax credit rate up to $4.5 million of qualifying SR&ED expenditures annually, the SR&ED program can now accommodate even higher levels of R&D investment, which encourages Canadian businesses to qualify for support on bolder, bigger, and better innovation projects.  

These major SR&ED program changes reflect Canada’s evolving focus on achieving a technologically sophisticated innovation economy. 

Next Steps for Canadian Businesses Accessing SR&ED 

The draft legislation released in August 2025 highlights major SR&ED program changes that aren’t simple updates; they’re a SR&ED program reset that expands eligibility access, rewards capital investment for SR&ED, and aligns the tax incentive program with the needs of Canada’s most innovative companies.   

If your Canadian business is investing in the development of new or improved products and processes, accessing SR&ED support can be pivotal.  

When your team wants to learn more or is ready to navigate these SR&ED changes into implementation, our Ryan Canada SR&ED team can help assess your technical eligibility, structure claims, understand the amount and timing of the benefits, and take full advantage of the new changes.  

Contact us to get started or visit our SR&ED overview page to learn more.