---
title: "SR&ED Expenditure Limit Doubles to $6 Million"
url: https://www.everstonecpa.com/tax-update/sred-expenditure-limit
description: "The enhanced 35% refundable SR&ED credit now reaches a $6 million expenditure limit, up from $3 million. See what changed for capital costs, and who gains."
type: tax-update
updated: 2026-10-04
summary: "The expenditure limit for the enhanced 35% refundable SR&ED credit rose to $6 million, from $3 million under the previous rules. Capital expenditures are eligible again after years of exclusion."
faq_count: 4
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) SR&ED limit doubles to $6 million


Corporate tax 

# SR&ED expenditure limit doubles to $6 million


By EverStone CPA · Updated August 2026




The figures on this page, in one view.





**Quick answer:** The expenditure limit for the enhanced 35% refundable SR&ED credit rose to $6 million, from $3 million under the previous rules. Capital expenditures are eligible again after years of exclusion.








**In force** · Tax years beginning on or after 16 December 2024
This measure is law and applies now. 






## How the SR&ED expenditure limit works


SR&ED — scientific research and experimental development — is Canada’s largest support program for businesses that develop or improve products and processes. It gives a tax credit on qualifying work.


A [Canadian-controlled private corporation](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/type-corporation.html) can claim an enhanced credit at 35%, and that credit is refundable: it can produce a cash refund even when the company owes no tax. That is what makes it valuable to a company that is developing rather than profiting.


The enhanced rate applies only up to an expenditure limit. That limit rose to $6 million, from $3 million under the previous rules.


Capital expenditures are eligible again after years of exclusion, so equipment bought for the development work can count rather than being written off as outside the program.




## How it applies to you


CCPCs carrying out eligible development work — a far broader group than the word “research” suggests. Software development, process improvement and product development regularly qualify. Companies that assume the program is for laboratories routinely leave the credit unclaimed.


The taxable-capital phase-out range widened to $15–$75 million, so larger companies retain more of the enhanced rate than before. Eligibility was also extended to certain Canadian public corporations.


Two groups should revisit their position: businesses that stopped claiming because they hit the old $3 million ceiling, and any that treated capital purchases as ineligible.



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## How to calculate it


What changed, at a glance:




Calculation steps 

| Step | Detail | 


| Expenditure limit for the enhanced rate | was $3 million, now $6 million | 

| Enhanced credit rate | 35%, refundable | 

| Capital expenditures | excluded for years, now eligible again | 

| Taxable-capital phase-out range | widened to $15–$75 million | 





A $4.5 million figure announced in December 2024 was superseded by Budget 2025 at $6 million. The move from prior law is therefore $3 million to $6 million; planning done against $4.5 million is out of date.




## What changed


A $4.5 million limit was announced in December 2024; Budget 2025 superseded it with $6 million, so the effective move from the old law is $3 million to $6 million. The taxable-capital phase-out range also widened to $15–$75 million, and eligibility for the enhanced rate was extended to certain Canadian public corporations.






## What to do


The practical hurdle is not the rate; it is documentation. A SR&ED claim is won or lost on records made at the time the work was done — what was attempted, what was uncertain, what was tried and what happened.


Records reconstructed afterwards are the single most common reason a claim fails on review. If you intend to claim, the time to set up the record-keeping is before the work, not at year-end.


If you stopped claiming because of the old ceiling, the limit has doubled. That is worth re-examining rather than assuming the position is unchanged.


**The practical point.** Businesses that stopped claiming because they hit the old ceiling should revisit, and so should any that wrote off capital purchases as ineligible. Contemporaneous documentation remains the practical hurdle: the claim is won or lost on records made at the time, not reconstructed afterwards.


Whether a project qualifies, and how much of the limit a corporation can use, is planned with the year’s spending; [SR&ED planning](https://www.everstonecpa.com/tax-planning-services-canada) belongs in that conversation.




## The terms used on this page



SR&ED Scientific research and experimental development — the federal tax credit program for development work. 
CCPC Canadian-controlled private corporation. The enhanced 35% refundable rate is available to these. 
Refundable credit A credit that can be paid out in cash even where no tax is owing. 
Expenditure limit The ceiling on spending that attracts the enhanced rate. Now $6 million. 



## Common questions about SR&ED limit doubles to $6 million




**What is the expenditure limit now?**

$6 million, for tax years beginning on or after 16 December 2024.



**I read that the limit was $4.5 million. Which is right?**

$6 million. A $4.5 million limit was announced in December 2024 and then superseded by Budget 2025 before it became operative. The move from the law as it previously stood is $3 million to $6 million, and any planning done against $4.5 million is out of date.



**I stopped claiming because I hit the old ceiling. Should I revisit?**

Yes — and so should any business that wrote off capital purchases as ineligible, because capital costs are back. The taxable-capital phase-out range also widened to $15–$75 million.



**What is the hardest part of a claim in practice?**

Contemporaneous documentation. The claim is won or lost on records made at the time, not reconstructed afterwards.






## Where this comes from


Every figure on this page is taken from the source below, not from interpretation:




- [Budget 2025 — Tax measures: supplementary information](https://budget.canada.ca/2025/report-rapport/tm-mf-en.html)



**General information, not tax advice.** This page explains a change in general terms. It cannot account for your circumstances and does not create a professional relationship. Confirm anything that affects a decision — [send an enquiry](https://www.everstonecpa.com/book-online).




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