---
title: "SR&ED Expansion 2026: Testing and Patent Costs Now Count"
url: https://www.everstonecpa.com/tax-update/sred-expansion-2026
description: "Budget 2026 widens SR&ED to regulatory testing and patent and IP registration costs, for tax years starting on or after 5 November 2026. Check your claim."
type: tax-update
updated: 2026-11-06
summary: "For tax years beginning on or after 5 November 2026, Budget 2026 proposes that SR&ED include tests, validations and studies needed for initial regulatory approval or certification of a new product or process, and the costs of filing and maintaining patents and similar IP protection (in Canada or abroad). Litigation to enforce IP is excluded. The enhanced credit rate stays at 35% and the general rate at 15%."
faq_count: 2
publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta
service_area: British Columbia, Alberta, Ontario and Manitoba
language: en-CA
contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online
---

[Home](https://www.everstonecpa.com/) [Tax updates](https://www.everstonecpa.com/tax-updates) [Budget 2026](https://www.everstonecpa.com/tax-update/federal-budget-2026) SR&ED now covers regulatory testing and patent costs

SR&ED

# SR&ED now covers regulatory testing and patent costs

By EverStone CPA · Updated November 2026

The research tax credit grows to include two costs that come at the end of development: getting a product approved, and protecting it.

**Quick answer:** For tax years beginning on or after 5 November 2026, Budget 2026 proposes that SR&ED include tests, validations and studies needed for initial regulatory approval or certification of a new product or process, and the costs of filing and maintaining patents and similar IP protection (in Canada or abroad). Litigation to enforce IP is excluded. The enhanced credit rate stays at 35% and the general rate at 15%.

**Developing a product?** We identify which development and approval costs can be claimed before the year closes. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=advisory#enquiry-form)

**Announced, not yet law** · Tax years beginning on or after 5 November 2026 (proposed)
This has been announced but is not yet law. It can change or be withdrawn.

## Example

A small medical-device company spends $40,000 on certification testing required before sale and $15,000 on patent filings. Today neither counts as SR&ED. Under the proposal both could, starting with its first tax year that begins on or after 5 November 2026. For a company on a December year-end that is the 2027 year.

The expenditure limit for the enhanced credit is covered on [the SR&ED expenditure limit page](https://www.everstonecpa.com/tax-update/sred-expenditure-limit).

Whether this applies to you depends on your year-end and structure; [ask about your own situation](https://www.everstonecpa.com/quick-question) and a CPA replies by email, usually the same business day, free.

## Common questions

**When does the SR&ED expansion start?**

For tax years beginning on or after 5 November 2026, if enacted. For a December year-end, that is 2027.

**Are legal costs to enforce a patent included?**

No. Filing and maintaining IP qualifies; enforcement and litigation do not.

## Where this comes from

Budget 2026 was tabled on 5 November 2026. Figures on this page are from:

- [Thor — 2026 Federal Budget: key tax measures](https://www.thor.ca/blog/2026/11/2026-federal-budget-key-tax-measures/)

- [BLG — Federal Budget 2026: tax measures](https://www.blg.com/en/insights/2026/11/federal-budget-2026-sovereignty-strategic-investment-and-tax-simplification)

- [Department of Finance Canada — Budget 2026: Key Measures](https://www.canada.ca/en/department-finance/news/2026/11/budget-2026-key-measures.html)

**General information, not tax advice.** Budget measures are proposals until enacted and can change. Before deciding anything, [send an enquiry](https://www.everstonecpa.com/book-online?service=advisory#enquiry-form).

[Federal Budget 2026: what changes for small business owners](https://www.everstonecpa.com/tax-update/federal-budget-2026)
[Productivity Mega Deduction: write off equipment in the year you buy it](https://www.everstonecpa.com/tax-update/productivity-mega-deduction)
[Canada Growth Incentive: up to $15 million of tax-free gains](https://www.everstonecpa.com/tax-update/canada-growth-incentive)

---
Source: https://www.everstonecpa.com/tax-update/sred-expansion-2026
Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online