SR&ED Tax Credit 2026: Rates, Limits and CRA Data

By Grantsights13 min readUpdated Oct 29, 202615 official sourcesHow we checkCorrections

Quick Answer: SR&ED (Scientific Research and Experimental Development) is a federal tax credit, not a grant.

Full answer and how we checked it

Most Canadian-controlled private corporations earn a 35% investment tax credit on up to $6 million of qualified R&D spending a year, fully refundable on current costs, and 15% above that. Other businesses earn 15%. According to the CRA's annual program statistics, 24,160 claims were filed in 2025-26 and the CRA allowed $4.6 billion in credits, with 90% of claims accepted as filed and 4% denied.

This guide is for: founders, CFOs and finance leads at Canadian technology, manufacturing, software, life sciences and agri-food businesses who want to know what the SR&ED tax credit pays, who qualifies after the 2025 and 2026 changes, and what trips claims up.

Data note: Grantsights checked every rate, limit, deadline and service standard below against canada.ca and budget.canada.ca on October 29, 2026. Program volume figures come from the CRA's SR&ED annual program statistics (opens in a new tab) (CRA fiscal years April to March, 2021-22 to 2025-26; page modified April 30, 2026). The province and industry tables are Grantsights analysis of the CRA's T2 Corporate SR&ED Statistics (2015 to 2021 tax years) (opens in a new tab), downloaded October 29, 2026 from the Open Government Portal. That archived dataset covers corporate returns assessed or reassessed as of March 31, 2024; the CRA rounds counts to the nearest 10, reports amounts in thousands, and shows suppressed cells as zero. SR&ED claims are confidential tax filings, so no public file names individual claimants or their credits. All amounts are in Canadian dollars.

Grantsights' own tools cover US funding only. What we cover outside the US

In this guide (11 sections)

SR&ED by the Numbers: What the CRA Allowed in 2025-26
How the SR&ED Tax Credit Works After the 2025 Budget Changes
What Work Qualifies (and What Doesn't)
Pre-Claim Approval: The 2026 Option Most Claimants Don't Know About
What the CRA Pages Don't Tell You About SR&ED
Where SR&ED Money Goes: Province and Industry
Provincial R&D Credits on Top of SR&ED
How to Claim SR&ED, Step by Step
Who Should Think Twice Before Claiming
Where to Go Next
Sources Checked

A note before you read: The grant search and reports Grantsights sells cover United States funding only, so nothing here is a product pitch for Canadian claimants. This guide sticks to what the CRA, the Department of Finance and the CRA's own tax statistics say. If a Canadian version of our tools would help you, let us know you're in Canada.

SR&ED by the Numbers: What the CRA Allowed in 2025-26

The CRA allowed $4.6 billion in SR&ED investment tax credits in fiscal 2025-26, on $4.9 billion claimed, according to its annual program statistics. Claims filed rose for the fourth straight year, from 20,332 in 2021-22 to 24,160 in 2025-26, and the denial rate has stayed between 3% and 4% throughout.

CRA fiscal year	Claims filed	Claims processed	ITCs claimed	ITCs allowed	Accepted as filed	Denied
2021-22	20,332	20,317	$3.4 billion	$3.3 billion	91%	3%
2022-23	20,464	20,079	$3.8 billion	$3.6 billion	91%	4%
2023-24	21,524	21,537	$4.4 billion	$4.2 billion	91%	3%
2024-25	22,758	22,738	$4.7 billion	$4.5 billion	90%	4%
2025-26	24,160	23,677	$4.9 billion	$4.6 billion	90%	4%

Source: CRA, SR&ED annual program statistics. Another 6% of claims each year were accepted after modifications. Processed claims can exceed filed claims because some were filed in an earlier year.

Two things stand out. First, the gap between claimed and allowed is small: specifically, $4.9 billion claimed against $4.6 billion allowed in 2025-26, about 6% of the dollars. Second, small businesses dominate the claim count but not the money. According to the same CRA page, businesses with gross income under $4 million made 65% of processed claims in 2025-26 but received 33% of ITCs allowed, while businesses with gross income over $250 million made 3% of claims and received 22% of the credits.

Business size (gross income)	Share of claims, 2025-26	Share of ITCs allowed, 2025-26
Under $4 million	65%	33%
$4 million to $20 million	20%	23%
$20 million to $250 million	12%	22%
Over $250 million	3%	22%

Source: CRA, SR&ED annual program statistics. 59% of ITCs allowed in 2025-26 were refundable and 41% non-refundable.

Software is now the biggest field by far. Software development accounted for 42.6% of ITCs allowed in 2025-26, up from 35.7% in 2021-22, according to the CRA. Medical sciences and engineering (14.2%), mechanical engineering (13.5%) and electrical engineering (12.5%) follow. Electrical engineering's share has fallen from 21.0% in 2022-23.

How the SR&ED Tax Credit Works After the 2025 Budget Changes

The enhanced SR&ED expenditure limit doubled from $3 million to $6 million for tax years beginning after December 15, 2024, according to the CRA's Get an investment tax credit (opens in a new tab) page. SR&ED gives you two things: a deduction of SR&ED spending against income (with any unused balance carried into future years) and an investment tax credit.

Who	ITC rate	Expenditure limit	Refundable?
CCPC, tax years beginning after Dec. 15, 2024	35% on qualified spending up to the limit, 15% above it	$6 million (was $3 million)	Current spending up to the limit: 100%. Capital spending up to the limit: 40%
Eligible Canadian public corporation (ECPC), tax years beginning after Dec. 15, 2024	35% up to the limit, 15% above	$6 million	Confirm with the CRA's ITC policy; the summary page states the 100% rule for CCPCs
Other "qualifying" corporations	15%	None	40% of the 15% credit
Other corporations	15%	None	Not refundable; reduces tax payable
Individuals	15%	None	40% of the credit, after it's applied against tax owing

Source: CRA, Get an investment tax credit (page modified October 14, 2026).

The phase-out. For a CCPC, the $6 million limit starts shrinking once the previous year's taxable capital employed in Canada reaches $15 million and disappears at $75 million. Before the change the range was $10 million to $50 million. For an ECPC, the limit shrinks when average revenue over the previous three fiscal years passes $15 million and hits zero at $75 million. For an associated group of CCPCs, the CRA's ITC policy says the limit is worked out for the group and then allocated among its members, so two related companies can't each claim $6 million at 35%.

Capital expenditures are back. Budget 2025 confirmed the plan to restore the eligibility of SR&ED capital expenditures, and the CRA now says capital expenditures made after December 15, 2024 can be claimed, and those made before December 16, 2024 can't.

Public companies are in. An ECPC is a public corporation resident in Canada and listed on a designated stock exchange. Before these changes, only CCPCs could earn the enhanced 35% rate.

Where the numbers came from. The 2024 Fall Economic Statement first proposed raising the limit to $4.5 million. According to Budget 2025's tax measures (opens in a new tab), the government then raised it to $6 million for taxation years that begin on or after December 16, 2024, and confirmed the phase-out, public-company and capital changes. The CRA's SR&ED news and updates (opens in a new tab) page says Bill C-15 received Royal Assent on March 26, 2026, and that Form T661, Schedule 31 and several policies were updated between May and October 2026 to match.

Worked example (hypothetical numbers). Picture a small business in Waterloo, a CCPC with $3 million of taxable capital, that spends $800,000 on qualified current SR&ED costs in a tax year that began in 2025. All of it is under the $6 million limit, so it earns 35% of $800,000, or $280,000, and because it's an enhanced credit on current spending, the whole $280,000 is refundable even if the company owes no tax. The same spending by a foreign-controlled private company would earn 15%, or $120,000, as a non-refundable credit that only reduces tax payable. Provincial credits can add more on top (see below).

What Work Qualifies (and What Doesn't)

According to the CRA's What work is eligible (opens in a new tab) page, SR&ED work has to meet 2 requirements: it must aim at a scientific or technological advancement, and it must be a systematic investigation or search in a field of science or technology. In plain terms:

Advancement. You're generating new knowledge, not applying what's already known.
Uncertainty. At the start, it wasn't known whether, or how, a given result could be achieved.
Systematic investigation. You defined a problem, formed a hypothesis, tested it by experiment or analysis, and drew conclusions.

Eligible work falls into 4 types: basic research, applied research, experimental development, and support work that directly backs one of those (engineering, design, operations research, mathematical analysis, computer programming, data collection, testing and psychological research).

The CRA lists work that never qualifies on its own, including market research or sales promotion, quality control or routine testing, research in the social sciences or humanities, style changes and routine data collection.

Projects matter. The CRA asks you to group work into SR&ED projects. Read the CRA's page on grouping work into projects before you write anything: the T661 narrative is written project by project, so the grouping drives how the uncertainty and the work are described.

Pre-Claim Approval: The 2026 Option Most Claimants Don't Know About

The CRA's pre-claim approval service, launched April 1, 2026, gives a decision within 8 weeks of a complete application, according to the CRA's After you apply for pre-claim approval (opens in a new tab) page. You apply before or early in the work, through My Business Account, and the CRA tells you whether the planned work is eligible.

According to the CRA's How to apply for pre-claim approval (opens in a new tab) page, you can apply if your business:

is a CCPC, another Canadian corporation, or a partnership,
has gross business income under $25 million, and
is in good standing with the CRA,

and the project hasn't been included in a previous SR&ED claim and doesn't involve issues that may be under litigation. You can apply even if you've only recently begun the work.

Why it's worth considering: the CRA's After you claim (opens in a new tab) page sets a 90-day service standard for refundable claims selected for review that include only pre-approved projects, against 180 days for other reviewed refundable claims. The downsides: there's no formal objection process if pre-approval is refused (you can resubmit with changes or just file a normal claim), and pre-approval doesn't replace the claim itself.

What the CRA Pages Don't Tell You About SR&ED

The program pages explain the rules. The statistics and the archived tax tables show how the money actually lands, and five findings should change how you plan a claim.

1. Across all claimants, the credit works out to about 22%, not 35%. In the 2021 tax year, the latest the CRA has published, 18,880 corporations reported $16.0 billion of qualified SR&ED expenditures and 24,020 corporations reported $3.50 billion of current-year ITCs allowable. Grantsights analysis of those two CRA tables (2B and 3B) puts the credit at about 22 cents per qualified dollar, because spending above the expenditure limit, and spending by corporations that aren't CCPCs, earns 15%. A CCPC entirely under the limit earns the full 35%, but budget on the rate that applies to you, not on the headline.

2. The average hides a wide spread. Grantsights analysis of the CRA's 2021 ITC-allowed table found an average of about $162,000 per corporation nationally, but that's pulled up by large claimants: 65% of claims come from businesses with gross income under $4 million, and those businesses get 33% of the money. In agriculture, forestry, fishing and hunting, 5,340 corporations were allowed $28.8 million in 2021, an average of about $5,400 each.

3. The deadline is unforgiving. For a corporation, the CRA's Get ready to claim (opens in a new tab) page sets the SR&ED reporting deadline at 12 months after the T2 return is due, which is about 18 months after year end. The CRA says it doesn't accept any changes to a claim after that date. Companies that underestimate the documentation work and wait until month 17 lose the claim outright if anything goes wrong.

4. Other funding shrinks your claim. The CRA's Assistance and Contract Payments Policy (opens in a new tab) says qualified SR&ED expenditures are reduced by government assistance (grants, subsidies and forgivable loans), by non-government assistance and by contract payments, project by project. If you also get an NRC IRAP contribution toward the same salaries, your SR&ED base drops by that amount. Plan both together rather than counting the money twice.

5. Watch who prepares your claim. The CRA's updates page warns dentists about third parties promising SR&ED access for product studies that may be non-compliant schemes, and reminds claimants that they stay responsible for their claims. Claim preparer details are required in Part 9 of Form T661, and the CRA says incomplete or inaccurate preparer information can bring a $1,000 penalty. A contingency-fee preparer who doesn't explain the eligibility test in plain language is a red flag.

Where SR&ED Money Goes: Province and Industry

Ontario corporations were allowed $1.08 billion of SR&ED ITCs in the 2021 tax year, the most of any province, according to Grantsights analysis of the CRA's T2 SR&ED statistics (Table 4B). Corporations operating in more than one province got $1.48 billion, the biggest single block, at an average of about $893,000 each.

Jurisdiction (2021 tax year)	Corporations allowed ITCs	ITCs allowed	Average per corporation	Change in ITCs since 2015
Ontario	9,040	$1,079.6 million	$119,400	+45%
Quebec	4,190	$624.3 million	$149,000	+29%
British Columbia	2,670	$387.0 million	$144,900	+69%
Alberta	1,830	$171.2 million	$93,600	+37%
Manitoba	530	$30.3 million	$57,100	+4%
Nova Scotia	260	$22.0 million	$84,800	+88%
Saskatchewan	3,190	$20.6 million	$6,500	+33%
New Brunswick	190	$14.6 million	$76,700	+115%
Multi-jurisdiction	1,660	$1,482.8 million	$893,300	+45%
All corporations	23,700	$3,845.1 million	$162,200	+44%

Grantsights analysis of CRA Table 4B, ITC allowed by jurisdiction, 2015 to 2021 tax years. Newfoundland and Labrador (70 corporations, $7.5 million) and Prince Edward Island (70, $2.3 million) are omitted for space; the territories are suppressed.

Saskatchewan is the outlier: more claimants than Alberta but an average of about $6,500. The CRA tables don't say why. By industry, manufacturing (5,120 corporations, $1.36 billion) and professional, scientific and technical services (7,110 corporations, $1.35 billion) were allowed almost the same total in 2021, but the average manufacturer got about $266,000 against about $189,500 in professional services. Information and cultural industries, which include software publishers, averaged about $277,000 across 1,090 corporations.

Provincial R&D Credits on Top of SR&ED

Most provinces add their own R&D credit, claimed alongside the federal one. The CRA's provincial and territorial R&D tax credits (opens in a new tab) summary lists programs in every province except Prince Edward Island, plus Yukon, and notes that the Northwest Territories and Nunavut don't offer one. Quebec's credits are administered by Revenu Québec, not the CRA.

That CRA summary was last updated January 23, 2024, and provincial rates and limits change, so confirm the current terms with your province before you count on them. Provincial credits also interact with the federal one: the CRA's Assistance and Contract Payments Policy has specific sections on the Ontario and Quebec R&D credits. This is where an accountant who files SR&ED claims every year earns their fee.

How to Claim SR&ED, Step by Step

The CRA's processing standard for refundable claims accepted as filed is 60 days, and in 2025-26 it met that standard 95% of the time, according to its program statistics. Here's the sequence:

Decide whether to seek pre-claim approval. If you're under $25 million in gross business income and the project hasn't started (or has just started), apply through My Business Account and expect a decision in about 8 weeks.
Keep contemporaneous records. The CRA says the best documentation is dated, signed and specific to the work, and must show what was done, who did it, when, and how you calculated the costs. Time sheets, lab or test logs, version-control history and design notes all count.
Group work into projects and write the technical narrative for each on Form T661: the uncertainty, the hypotheses, the tests and the advancement.
Calculate expenditures. Work out allowable expenditures, the pool of deductible SR&ED expenditures and qualified expenditures for the ITC, then subtract assistance and contract payments.
File with your return if you can. Corporations claim the credit on Schedule 31 alongside Form T661. Treat the 18-month reporting deadline as a backstop, not a target.
Answer a review promptly if one comes. The CRA may ask for a site visit or virtual meeting with senior technical and finance staff. If you disagree with the result, you can object within 90 days of the notice of assessment or reassessment.

If you haven't submitted a claim in the last 3 years, the CRA says its First-Time Claimant Advisory Service may apply to you; ask about it before you file.

Who Should Think Twice Before Claiming

SR&ED rewards companies doing real technical problem-solving with good records. It's a poor fit if:

Your "R&D" is product polish. Style changes, routine testing and quality control are excluded by name. If the outcome was never technically uncertain, don't bother: the claim will likely fail review, and the documentation work isn't worth it.
You can't wait. The credit arrives after year end, filing and processing. If you need money to start the work, look at cost-shared programs like NRC IRAP funding or the options in our guide to small business grants in Canada.
You're a sole proprietor expecting 35%. Individuals earn the basic 15% rate with 40% refundability; only corporations meeting the CCPC or ECPC rules get the enhanced rate.
You're pre-revenue and pre-incorporation. Our guide to Futurpreneur and startup funding in Canada covers what founders can get before they have a corporation and payroll.

Where to Go Next

If you're a CCPC planning a new technical project in 2027, pre-claim approval is the one new tool worth trying: it costs nothing but time and tells you early whether the CRA sees the work as SR&ED. If you're an Ontario company combining tax credits with direct funding, read our guide to small business grants in Ontario. Hiring a student developer or lab assistant next summer? Canada Summer Jobs pays part of the wage. If that student works on SR&ED, the subsidy is government assistance under the CRA's policy and reduces the claimable wages.

Sources Checked

All pages read and files downloaded on October 29, 2026.

Frequently Asked Questions

Is SR&ED a grant?

No. SR&ED is a federal tax incentive run by the Canada Revenue Agency. You do the research work first, pay for it, then claim a deduction and an investment tax credit (ITC) with your tax return. For most Canadian-controlled private corporations (CCPCs) the enhanced 35% credit on current spending up to the expenditure limit is fully refundable, so a company with no tax owing can still get cash back, but only after it files and the CRA processes the claim.

How much is the SR&ED tax credit in 2026?

According to the CRA's investment tax credit page, the basic rate is 15% of qualified SR&ED expenditures. CCPCs, and since tax years beginning after December 15, 2024 eligible Canadian public corporations, can earn 35% on up to $6 million of qualified expenditures a year. Spending above the limit earns 15%. At 35% of $6 million, the most a single corporation or associated group can earn at the enhanced rate in a year is $2.1 million.

What changed for SR&ED in Budget 2025?

Budget 2025 raised the enhanced-rate expenditure limit to $6 million, up from the $4.5 million announced in the 2024 Fall Economic Statement and the $3 million that applied before. It also confirmed the Fall Statement changes: the taxable capital phase-out moved to $15 million to $75 million, eligible Canadian public corporations gained access to the 35% rate, and capital expenditures made after December 15, 2024 became eligible again. The CRA says Bill C-15, which enacted these changes, received Royal Assent on March 26, 2026.

What is SR&ED pre-claim approval?

It's an optional CRA service launched on April 1, 2026 that tells you whether planned work qualifies before you spend on it. Applicants must be a CCPC, another Canadian corporation or a partnership, with gross business income under $25 million and good standing with the CRA. The CRA says it decides within 8 weeks of a complete application, and there's no formal objection process if it says no. You still have to file a normal SR&ED claim afterwards.

What is the deadline to file an SR&ED claim?

For a corporation, the SR&ED reporting deadline is 12 months after the T2 return is due, and the T2 is due 6 months after the tax year end, so you have about 18 months from year end. Individuals with a business have until June 15 plus 12 months. The CRA doesn't accept any changes to a claim after the reporting deadline passes.

How long does the CRA take to process an SR&ED claim?

The CRA's service standards are 60 days for refundable claims accepted as filed, 90 days for refundable claims selected for review that include only projects with pre-claim approval, and 180 days for other refundable claims selected for review. There's no service standard for non-refundable claims. In 2025-26 the CRA met the 60-day standard on 95% of claims and the 180-day standard on 92.5%.

Can I get SR&ED and IRAP funding for the same project?

Yes, but they interact. The CRA's Assistance and Contract Payments Policy says qualified SR&ED expenditures are reduced by government and non-government assistance and by contract payments, project by project. Government assistance includes grants, subsidies and forgivable loans, so an IRAP contribution toward the same salaries generally shrinks the base your SR&ED credit is calculated on.

Last updated October 29, 2026. Published by Grantsights from public sources. See our editorial policy, how we build and check guides, corrections and how we make money.