Launching the second phase of consultations on the Scientific Research and Experimental Development Tax Incentive Program

Current Status: Open

Join In

Budget 2024 announced an additional $600 million over four years starting in 2025-26, with $150 million per year ongoing, for future enhancements to the Scientific Research and Experimental Development (SR&ED) tax incentive program. To inform the delivery of this additional funding, the government is launching a second phase of consultations as it works to enhance the SR&ED program and target this additional funding to boost research and innovation.

Key Questions for Consideration

During the previous round of consultations, the Department of Finance heard from stakeholders proposing cost-neutral changes to the SR&ED program. While the Department continues to assess the feedback received to date, we are launching a second phase of consultations to hear feedback on further specific changes that could enhance the program.

For example, some stakeholders have argued that access to the SR&ED program's enhanced refundable tax credit should be extended to Canada's small- and medium-sized public corporations or that the non-refundable general credit should be made refundable. Other stakeholders contend that the SR&ED definition is too narrow and should be expanded to allow for some aspects of commercialization activity. However, these proposals raise new considerations and potential administrative issues to explore, and the government wants to ensure any changes would enable the next generation of innovative small- and medium-sized Canadian businesses to scale up, create jobs and grow the economy.

In this respect, the Department welcomes feedback on the following questions:

  1. What are some of the challenges faced by research-and-development-performing small- and medium-sized Canadian public corporations when it comes to financing?
  2. To avoid any potential disincentives to growth, would entrepreneurs favour a program with one single rate accessible to all, even it if means somewhat lower support for small Canadian-controlled private corporations?
  3. How should the concept of "Canadian" public corporations be defined, should the government proceed with measures to improve access to the SR&ED program's enhanced credit for Canadian public corporations?
  4. The SR&ED program currently has rules to prevent the multiplication of the expenditure limit by Canadian-controlled private corporations with common control. If enhanced support were extended to public corporations, how should relationships among legal entities be delineated?
  5. Current global initiatives rely on accounting concepts of relationship and control to determine whether entities are included in a large business corporate group. Should existing international practices of this sort be adapted for determining relations for public corporations in the context of the SR&ED program?
  6. What is the optimal size-based metric (e.g., taxable capital employed in Canada, revenue) to phase out enhanced support for public corporations, including those in a corporate group?
  7. How does refundability under the SR&ED program influence investment decisions and planning? To what degree would Canada become a more competitive location to undertake research and development (R&D), compared to other jurisdictions, if credits earned at the general rate were partially or fully refundable?
  8. Would it be preferable that the government make the general rate refundable, but at a reduced rate? What would be an acceptable trade-off in this regard?
  9. In your view, should SR&ED-eligible activity be broadened from the existing OECD definition of SR&ED, generally used by Canada and other countries offering R&D tax credits? If so, how would you propose to amend the current definition? Why would any additional activities warrant government support?
  10. Can you provide specific examples of activity that you think should be eligible for the SR&ED program that are not currently eligible? Would such a change bring additional predictability to claimants?
  11. How could the SR&ED program be enhanced to support businesses conducting R&D in the digital age, particularly in respect of software development and the emergence of artificial intelligence?
  12. To what extent do businesses face financial challenges and trade-offs in protecting their intellectual property (IP) in Canada and abroad? Would it be appropriate for the government to provide additional support to these activities under the SR&ED program? If so, what would be a cost-effective approach? 

Contact Us

Submissions for this consultation will be open until May 27, 2024.

Email us your comments and feedback at with "SR&ED Review" as the subject line.

Comments and feedback may also be sent by mail to:

Director General
Business Income Tax Division
Tax Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa ON K1A 0G5

Who is the focus of this consultation?

Through this consultation, we want to hear from all Canadians and stakeholders, including innovative businesses conducting R&D in Canada, advocacy groups, research organizations, academics, and tax practitioners.


Information received through this comment process is subject to the Access to Information Act and the Privacy Act. Should you indicate that your comments, or any portions thereof, be considered confidential, the Department of Finance will make all reasonable efforts to protect this information.

Related links

Get in touch

Questions about this consultation process can be emailed to   

Page details

Date modified: