SR&ED now covers regulatory testing and patent costs
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%.
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.
Whether this applies to you depends on your year-end and structure; ask about your own situation and a CPA replies by email, usually the same business day, free.
Common questions
When does the SR&ED expansion start?+
Are legal costs to enforce a patent included?+
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
- BLG — Federal Budget 2026: tax measures
- Department of Finance Canada — Budget 2026: Key Measures
General information, not tax advice. Budget measures are proposals until enacted and can change. Before deciding anything, send an enquiry.