From 2014 until this year, a machine bought for R&D was invisible on a SR&ED claim. A custom test rig, a pilot line, a prototyping cell — none of it counted, however experimental the work. Bill C-15, which received Royal Assent on March 26, 2026, changed that. R&D equipment is claimable again, the enhanced credit's spending limit has doubled to $6 million, and British Columbia has followed on both.
The changes apply to tax years that began after December 15, 2024, so for most companies the 2025 claim — the one many are preparing now — is the first to benefit. This guide covers what changed, who gains the most, and the 90% test that decides whether a piece of equipment counts.
What changed in SR&ED for 2026?
Every change below is in force and applies to tax years that began after December 15, 2024.
| Rule | Before | Now |
|---|---|---|
| Enhanced 35% credit limit | $3M a year | $6M a year |
| Taxable-capital phase-out | $10M–$50M | $15M–$75M |
| R&D equipment (capital property) | Not eligible since 2014 | Eligible if acquired after Dec 15, 2024 |
| Equipment lease costs | Not eligible since 2014 | Eligible if incurred after Dec 15, 2024 |
| Eligible Canadian public corporations | Basic 15% credit only | Access to the enhanced 35% credit |
| BC SR&ED credit (10%) | Due to expire in 2027; $3M refundable limit | Permanent; $6M refundable limit; equipment included |
At the top of the range, the maximum enhanced federal credit doubles from $1.05M to $2.1M a year. Separately, CRA launched an optional pre-claim approval process on April 1, 2026: through My Business Account, a company can ask CRA to confirm that its work qualifies before it files, with a determination within eight weeks.
Why equipment matters most for manufacturers
Software companies mostly claim salaries, so their claims barely change. Manufacturers are different. Experimental development often runs on purpose-built hardware: a test rig to validate a new process, a pilot line for a new product, a prototyping machine, specialized instrumentation. Since 2014 those costs earned nothing. Now they earn the same 35% rate as salaries, subject to the rules below.
An example. A BC company that qualifies as a CCPC buys a new $400,000 pilot line in 2025, intending to use it at least 90% of its operating time for experimental development. Its other SR&ED spending is well under the $6M limit.
- BC credit:10% × $400,000 = $40,000, refundable.
- Federal credit:35% × ($400,000 − $40,000) = $126,000. The BC credit reduces the federal base.
- Cash versus credit: 40% of the federal amount ($50,400) is paid as a cash refund. The other $75,600 reduces federal tax payable and can be carried back 3 years or forward 20.
That is $166,000 in credits on a $400,000 machine, $90,400 of it as a cash refund. You can run your own numbers in our SR&ED calculator, which now includes equipment and the $6M limit.
The 90% test: does your machine count?
Equipment qualifies only if, when you acquired it, you intended to use it “all or substantially all” of its operating time in its expected useful life for SR&ED in Canada, or to consume all or substantially all of its value in SR&ED. CRA reads “all or substantially all” as 90% or more.
- Intent at acquisition is what gets tested, so the evidence should date from then: project plans, purchase approvals, commissioning notes, usage logs.
- A production machine that runs the occasional R&D batch does not meet the test.
- Shared-use equipment— used primarily (more than 50%) for SR&ED — can still earn a partial credit, on up to half of its capital cost spread over two years.
- Used (second-hand) equipment can be deducted but earns no investment tax credit. Buildings and leasehold interests in buildings are excluded, and under the proxy method so is general-purpose office equipment and furniture.
- Timing:the property must be acquired, and available for use, after December 15, 2024. Equipment bought earlier stays out, even if it still runs R&D today.
- Recapture: if the equipment is later sold or converted to commercial use, part of the credit is clawed back.
Buy or lease? The cash arrives differently
Lease costs for equipment used 90% or more for SR&ED are treated as current expenditures. For a qualifying CCPC under the limit, the 35% credit on current spending is fully refundable, whereas only 40% of the credit on purchased equipment is paid in cash.
| $100,000 of equipment cost in a year | Leased | Purchased |
|---|---|---|
| BC credit (10%, refundable) | $10,000 | $10,000 |
| Federal credit (35% after the BC credit) | $31,500 | $31,500 |
| Cash refund for that year | $41,500 | $22,600 |
| Credit carried against future tax | $0 | $18,900 |
This compares how the refund is paid, not which option is cheaper: lease payments spread over several years and a one-time purchase are different costs. Lease costs incurred before December 16, 2024 do not qualify. Under the proxy method, half of the lease cost of equipment used primarily (50% to under 90%) for SR&ED can also be claimed.
Which claims benefit
- The $6M limit and the equipment rules apply to tax years beginning after December 15, 2024. For a December 31 year-end, 2025 is the first year.
- SR&ED claims are due 18 months after the end of the tax year — June 30, 2027 for a December 31, 2025 year-end.
- CRA updated its forms and policies in the months after Royal Assent. If you filed a 2025 claim early, check whether equipment or the higher limit was left out. Within the 18-month window, a claim can generally still be amended.
BC: a permanent credit, and a new manufacturing credit
BC Budget 2026 made the 10% BC SR&ED credit permanent (it had been due to expire in 2027), raised its refundable limit to $6M for CCPCs and eligible Canadian public corporations, and accepted capital expenditures as BC qualified expenditures for tax years beginning on or after December 16, 2024.
The same budget created a separate, refundable BC manufacturing and processing investment tax credit: 15% of eligible spending on new machinery, equipment and certain buildings used primarily for manufacturing or processing in BC, acquired and available for use after March 31, 2026, on up to $2M of eligible expenditures (shared within an associated group). The rate holds at 15% until March 31, 2031 and then steps down. It is open to CCPCs with a permanent establishment in BC, and spending already claimed under the BC SR&ED credit cannot be claimed again under it.
In practice, a machine dedicated to experimental development points to SR&ED; a production machine points to the manufacturing credit, which your accountant claims on the corporate return. For equipment that might qualify for SR&ED, the documentation needs to start at purchase.
What else changed
- Public companies: eligible Canadian public corporations can now earn the enhanced 35% credit, which used to be reserved for CCPCs.
- Mid-sized companies:the $6M limit now starts to shrink only when the associated group's prior-year taxable capital passes $15M, and disappears at $75M (previously $10M and $50M). More growing companies keep the full enhanced credit.
- Pre-claim approval: optional, through My Business Account, with a CRA determination within eight weeks. It is useful when a large or unusual project is at stake.
What to do now
- List the equipment your company acquired after December 15, 2024, with purchase dates, cost and what it was bought for.
- Sort each item by intended use: 90%+ SR&ED (full claim), more than 50% (partial, shared-use), or mainly production (no SR&ED; in BC, look at the manufacturing credit).
- Pull the lease agreements for R&D equipment with costs incurred after December 15, 2024.
- Collect the evidence of intent: project plans, approvals, commissioning records and usage logs.
- Estimate the result in the SR&ED calculator.
If your claim is close to its 18-month deadline, or was filed before the equipment rules were reflected, send a note through the contact pagewith your year-end, a rough R&D spend and a list of the equipment you bought. We'll reply within a business day with a first read on what can be added. More on how we work is on our SR&ED page.
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Frequently asked questions
What changed in SR&ED in 2026?
Bill C-15, which received Royal Assent on March 26, 2026, doubled the expenditure limit for the enhanced 35% refundable credit from $3 million to $6 million, widened the taxable-capital phase-out to $15 million–$75 million, made capital expenditures such as R&D equipment eligible again, and gave eligible Canadian public corporations access to the enhanced credit. The changes apply to tax years that begin after December 15, 2024.
Can equipment be claimed under SR&ED again?
Yes. Depreciable property acquired and available for use after December 15, 2024 can be claimed if, when it was acquired, it was intended to be used 90% or more of its operating time for SR&ED in Canada, or to have 90% or more of its value consumed in SR&ED. Buildings are excluded, and used equipment can be deducted but earns no investment tax credit.
Is the SR&ED credit on equipment refundable?
Partly. For a qualifying CCPC, the 35% credit on current expenditures is fully refundable up to the $6 million limit, but only 40% of the credit earned on capital expenditures is paid in cash. The rest reduces tax payable and can be carried back 3 years or forward 20.
Can leased equipment be claimed under SR&ED?
Yes. Lease costs incurred after December 15, 2024 for equipment used 90% or more for SR&ED count as current expenditures. Under the proxy method, half of the lease cost of equipment used primarily (50% to under 90%) for SR&ED can also be claimed.
Does BC's SR&ED credit include the 2026 changes?
Yes. BC Budget 2026 made the 10% BC SR&ED credit permanent, raised its refundable limit to $6 million for CCPCs and eligible Canadian public corporations, and accepted capital expenditures as BC qualified expenditures for tax years beginning on or after December 16, 2024.