SR&ED Tax Credit Expansion for the Canadian Mining and Natural Resource Sectors

When governments change tax policy, resource companies often wait on the sidelines, but Canada’s latest Scientific Research and Experimental Development (SR&ED) draft legislation updates demand attention for these Canadian sectors. 

This marks a moment in time where Canada’s mining and natural resource sectors are at an inflection point. Global demand for metals, critical minerals, and energy is rising, driven by transition technologies, clean energy, and geopolitical shifts. To stay competitive, companies must innovate to develop new extraction, processing, and remediation technologies.  

The recent modernization of the SR&ED tax incentive program aims to help make that innovation more affordable and accessible. In particular, the changes unlock greater incentives for technological development and improvements through research and development (R&D). In this post, our team breaks down what’s changed, what it means for mining and natural resources, and how firms can take advantage. 

 

What’s Changing: Key Federal SR&ED Reforms 

Return of Capital Expenditures and Higher Limits 

One of the biggest shifts is the reinstatement of “capital asset expenditures” into eligible SR&ED claims. Under earlier rules (pre-2014), certain capital expenditures were allowed. They were later removed, but now (per the 2024 Fall Economic Statement and associated draft legislation) capital expenditures (for property acquired or lease costs incurred after that statement) are once again eligible both for deduction against income and for investment tax credits. 

Additionally, the threshold for the enhanced SR&ED refundable credit is increasing. Previously, qualifying Canadian-controlled private corporations (CCPCs) could earn a 35% rate on up to $3 million of qualifying expenditures annually. Under the new regime, that limit rises to $4.5 million. 

Expanded Eligibility and Phase-Outs 

The taxable capital threshold that determines when the enhanced credit begins to phase out is also being bumped up. Before, those thresholds were $10 million and $50 million; now they will be raised to $15 million and $75 million respectively. That means more companies, including small public and mid-sized private operations, may qualify for the higher credit rate and refundable status. 

Furthermore, public Canadian corporations that meet the criteria will now be eligible for the enhanced 35% refundable credit (on up to $4.5 million in qualifying SR&ED), a shift from past limitations. Most importantly in this sector, Canadian public companies now have the choice to elect an alternative revenue test with a grind between $10 million and $75 million of annual revenue. Considering many junior mining companies are pre-revenue, this represents a significant opportunity for early-stage resource companies to invest heavily in R&D.   

Effective Dates and Transition 

These changes apply to taxation years that begin on or after December 16, 2024, unless otherwise noted. Capital expenditure eligibility applies to property acquired and available for use within a tax year beginning on or after the date of the Fall Economic Statement, and lease costs first payable after that date. 

Implications for Mining and Natural Resource Sectors 

Early-Stage Research & Development 

Interaction with METC and CMETC

The exclusion of mineral exploration, prospecting, drilling, and production from SR&ED remains in place under the draft legislation. Natural resources companies should continue to leverage flow-through share incentives such as the Mineral Exploration Tax Credit (METC) or Critical Mineral Exploration Tax Credit (CMETC) for exploration work. However, significant opportunities remain: organizations pursuing genuine R&D—like innovative processing techniques, advanced technologies, or experimental methods—can still benefit from SR&ED, provided costs are properly segregated.

Maximizing value under this dual framework requires careful planning. Given the complexity, consultation with Ryan professionals is strongly recommended to ensure your organization captures all available incentives.

Processing, Efficiency, and Environmental Innovation 

Mining firms face rising pressure to reduce emissions, minimize environmental impact (tailings, water use, land remediation), and improve processing efficiency. The new SR&ED rules reward R&D in those areas. For example, firms experimentally developing new sensor technologies, more efficient extraction/beneficiation processes, or cleaner tailings treatment may benefit, including incremental improvements.  

The enhanced refundable credit and expanded thresholds can help offset the cost of pilot plants, lab testing, or equipment upgrades. Our team at Ryan Canada and other Canadian consultancies have already pointed out that technological uncertainty in areas like pilots, processing technologies, or environmental remediation are strong candidates for SR&ED credit. 

Provincial and Regional Dimensions 

Federal changes are big, but provincially there are also supports which stack up. Many provinces have their own R&D or SR&ED-type credits or investment tax credits. For natural resources companies operating in virtually all provinces except PEI these provincial credits can supplement the federal SR&ED, increasing total incentives.

 In many provinces, particularly in northern or remote regions, costs are higher; with the improved SR&ED program, some of those cost disadvantages can be mitigated. Also, the Mineral Exploration Tax Credit (via flow-through shares) has been extended by two more years to March 31, 2027, providing an additional financing lever for exploration-focused firms.

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Case Study and Data Snapshot 

To illustrate the scale of what’s possible: 

• In 2023, Canada’s mining sector contributed $117 billion, roughly 4% of GDP, and directly employed around 430,000 people. When oil/gas, extraction, and related services are included, the contribution rises to about 5.1% of GDP.  
• Total mineral production in that year was about $71.9 billion, slightly down from previous years but well above earlier cycles. 

With these numbers, even small percentage improvements in cost structures from better tax credits or more R&D can mean millions in savings for reinvestment in technology and capacity. 

“The SR&ED program has fuelled Canada’s innovation ecosystem for many years, and this major draft legislation announced in August 2025 improves access to the program … 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. 

Risks and Aspects Companies Should Watch

While the SR&ED expansion offers many benefits, mining and natural resource companies should plan carefully: 

• Documentation and definition of eligible work: Qualifying activity must include technological uncertainty, systematic investigation i.e. , experimentation, and technological advancement. Proof of effort related to overcoming this technological uncertainty is essential. Past audits have flagged weak documentation and other evidence.
• Capital vs operational distinction: Even though capital expenditures are allowed again, rules around when equipment is used commercially vs “for SR&ED work”, when the asset becomes available for use, or when lease payments qualify may bring complexity.
• Provincial eligibility mechanics: Not all provinces have identical SR&ED or R&D‐credit rules; sometimes you need to coordinate or stack claims, which can be administratively demanding. Cash flow timing: Refundable vs non-refundable credits, when claims are processed, and availability of financing need to be considered, especially for firms that are capital-light but innovation-heavy.

Why the SR&ED Expansion Matters Now  

The recent SR&ED reforms are among the most significant in over a decade. By restoring capital expenditures, boosting limit thresholds, and widening eligibility (including for public corporations), the federal government has re-energized the program.  

For the mining and natural resource sectors, these changes arrive at a critical moment: with rising global demand for minerals, increasing environmental and regulatory pressures, and the need to stay competitive, the ability to recover more R&D costs could alter investment decisions, making earlier and more ambitious innovation more feasible. 

If you operate in the natural resources sector this is a chance to rethink your R&D strategy. Whether you’re experimenting to enhance the capabilities of your equipment, processes, automation, or environmental compliance, the updated SR&ED program changes the economics.

Ready to Get Started? 

Don’t leave innovation on the table. Our Ryan Canada Government Funding Team stands ready to help you understand how these SR&ED changes apply to your operations. We’ll assess what work qualifies, coordinate federal and provincial credits, and build claims that maximize value. Reach out today—let’s turn your R&D investments into funding wins.