Canada’s SR&ED overhaul begins to catch up with how companies scale

By Daniel Perry,
Director of Federal Affairs

For years, Canadian innovators have been consistent in their assessment of the Scientific Research and Experimental Development (SR&ED) tax credit. The program was too slow, too uncertain, and too complex. More importantly, it had fallen out of step with how modern companies build, invest, and scale.

That is now beginning to change.

Beginning tomorrow, a set of long-anticipated reforms to SR&ED will come into effect, including the introduction of a pre-claim approval process, streamlined administration, and expanded eligibility. Together, these changes represent one of the most significant updates to the program in over a decade.

They are also the result of sustained input from Canadian innovators and ongoing policy work led by the Council of Canadian Innovators. For a program that accounts for nearly $4 billion in annual federal support, the stakes are significant. Historically, SR&ED has struggled to consistently translate public investment into Canadian economic growth, intellectual property retention, and globally competitive firms. The reforms now being introduced begin to address some of those structural gaps.

Over several years, CCI has advanced a practical framework for improving the program. The focus has been straightforward: reduce complexity, improve predictability, and better align incentives with commercialization and the growth of Canadian-controlled companies. The objective has not been to increase spending, but to ensure that existing investment delivers stronger outcomes.

Several of the changes coming into force reflect that approach. Expanded eligibility, including access for public companies, addresses a long-standing issue for firms as they scale. The inclusion of capital expenditures better reflects the realities of sectors where innovation is tied to physical infrastructure and equipment. These are not marginal adjustments, but targeted responses to issues consistently raised by companies operating in the system.

The introduction of a pre-claim approval pathway may prove particularly consequential. For many firms, uncertainty in the claims process has been a persistent barrier, requiring significant investment without clarity on eligibility. Providing earlier determinations should reduce that risk and allow companies to plan with greater confidence.

There is also a clear effort to reduce administrative burden. Simplified application processes and more direct interaction with the Canada Revenue Agency are intended to limit reliance on intermediaries and ensure that more of the program’s value reaches the companies it is designed to support.

Taken together, these changes suggest a broader shift in how innovation policy is being approached. There is a growing recognition that support programs must reflect the full lifecycle of company growth, and that public investment should translate more directly into domestic economic outcomes. This includes a stronger focus on intellectual property, data, and the conditions required for firms to scale globally.

At the same time, these reforms should be seen as an initial step rather than a complete solution. Questions remain around how effectively the program will support Canadian-controlled firms, how outcomes will be measured, and how closely R&D support will be linked to commercialization and long-term competitiveness.

The next phase will depend on implementation. Ensuring that the system works as intended—and that it continues to evolve in response to how companies operate—will be critical.

The direction is encouraging. The challenge now is to ensure the program delivers on its intent and contributes meaningfully to building globally competitive companies anchored in Canada.

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About the Council of Canadian Innovators

The Council of Canadian Innovators is a national member-based organization reshaping how governments across Canada think about innovation policy, and supporting homegrown scale-ups to drive prosperity. Established in 2015, CCI represents and works with over 180 of Canada’s fastest-growing technology companies. Our members are the CEOs, founders, and top senior executives behind some of Canada’s most successful ‘scale-up’ companies. All our members are job and wealth creators, investors, philanthropists, and experts in their fields of health tech, cleantech, fintech, cybersecurity, AI and digital transformation. Companies in our portfolio are market leaders in their verticals, commercialize their technologies in over 190 countries, and generate between $10M-$750M in annual recurring revenue. We advocate on their behalf for government strategies that increase their access to skilled talent, strategic capital, and new customers, as well as expanded freedom to operate for their global pursuits of scale.