With the start of 2026, the landscape for Canadian innovation funding has fundamentally shifted. Federal Budget 2025 SR&ED measures and Québec’s bold restructuring have moved from proposals to active levers. Your business must now use them to future‑proof its R&D strategy.
Below, we update the key shifts for the current year. And what you need to pivot for in the upcoming tax cycles.
What’s Official in 2026 (Now in Force)
- Finalized Federal Expenditure Limits: The annual limit for the 35% enhanced refundable SR&ED credit for CCPCs is now confirmed at $6 million. This doubles the previous $3 million cap. Practical Impact: Qualifying CCPCs can now earn up to $2.1 million in refundable cash back per year.
- Public Corporation Access: For the first time, eligible Canadian Public Corporations (CCPCs) can access the enhanced 35% refundable rate on up to $6 million of spending. New gross revenue phase-out rules will apply.
- Restored Capital Expenditures: Businesses that acquire property after December 16, 2024 can once again claim SR&ED deductions and ITCs on it. This includes specialized R&D machinery, testing equipment, and prototyping tools.
- Updated Phase-Out Thresholds: To support scaling businesses, the government raised the taxable capital phase-out band to $15 million – $75 million, allowing growing firms to retain the enhanced 35% rate for longer.
What’s Changing in Québec
- The New CRIC (Tax Credit for R&D, Innovation and Pre-commercialization): Québec now uses CRIC as the primary vehicle for provincial innovation support, replacing eight legacy credits (including R&D salaries and university research) for tax years beginning after March 25, 2025.
- Rate Structure: A 30% increased rate applies to the first $1 million of eligible expenditures, with a 20% base rate thereafter.
- Broader Scope: CRIC uniquely includes pre-commercialization activities, such as technological validation and regulatory studies, extending support beyond traditional R&D.
- DCI Alignment: For tax years beginning after March 25, 2025, the Deduction for the Commercialization of Innovations (DCI) nexus ratio now references CRIC-eligible R&D expenditures.
Administrative Modernization: Launching April 1, 2026
The CRA is moving toward a more predictable, tech-forward administration:
- Elective Pre-Claim Approval: Businesses can request upfront technical approval before incurring costs. Approved projects move into a 90-day fast-track processing window.
- AI-Enhanced Risk Assessment: AI systems will now identify low-risk claims for immediate processing, reducing the standard audit burden for straightforward R&D activities.
A 5-Point Strategic Checklist for 2026
- Model Your Expanded Limit: Evaluate your engineering and R&D spend against the new $6 million threshold. For firms previously capped at $3 million, this may reveal significant unclaimed value.
- Audit Your Capital Acquisitions: Ensure any specialized hardware or machinery acquired since late 2024 is documented as 90%+ used for R&D to qualify under the restored capital rules.
- Map the CRIC Transition: If you are a Québec-based firm, ensure your projects are re-scoped under CRIC definitions. Remember that Quebec has now abolished legacy for any new tax years.
- Evaluate Pre-Claim Approval: For large-scale or novel projects starting after April, consider the elective pre-claim process to secure funding certainty and faster 90-day cash flow.
- Contemporaneous Documentation is Key: With AI-driven risk assessments, the quality of your technical narratives and time-tracking is more critical than ever.
Bottom Line
The 2026 innovation landscape offers unprecedented funding levels. But the shift to the new Federal Budget 2025 SR&ED program and Québec’s CRIC requires immediate planning.
As the market leader in innovation funding, Leyton helps Canadian businesses navigate these shifting policies. We proactively plan for transitional rules and use CRA-aligned methodologies.
Contact our team for an innovation funding review to assess your 2026 upside potential.Contactez notre équipe pour une revue du financement de l’innovation afin d’évaluer votre potentiel de gain pour 2026.
