Is the SR&ED Program Changing?

  • By Nicole Mirabal
    • Apr 04, 2024
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SR&ED Program Change

The Canadian government has embarked on a significant initiative to revitalize the landscape of research and development (R&D) with the launch of consultations on the Scientific Research and Experimental Development (SR&ED) program. This move, announced on January 31, 2024, underscores a commitment to enhance Canadian innovation and retain intellectual property within the country.

The SR&ED Program We Know Now:

Since its inception, the SR&ED program has been pivotal in fostering innovation across Canada. Originating from post-WWII efforts to spur productivity and innovation, the program has evolved into the primary federal initiative supporting business R&D, disbursing over $3 billion annually to more than 20,000 claimants. Administered by the Canada Revenue Agency (CRA), SR&ED stands as a cornerstone of federal funding for innovation.

The Problem with SR&ED

Recent amendments to SR&ED guidelines in 2021 marked a significant shift, prompting claimants to adapt to a revamped framework. The replacement of traditional eligibility criteria with a “Why” and “How” test posed challenges, leading to a call for clarity and alignment with historical standards.

The push for SR&ED program review gained momentum with the government’s commitment outlined in the 2022 Federal budget. The subsequent announcement on December 19, 2023, solidified this commitment, emphasizing a cost-neutral modernization to better align the program with broader national objectives.

SR&ED Program Change

Which Aspects are Under Revision?

The Department of Finance invites stakeholders to weigh in on critical aspects of SR&ED program enhancement, including but not limited to:

  • Effectiveness and Support
  • Eligibility Criteria
  • Complementarity with Existing Programs
  • Targeting Assistance
  • Intellectual Property Retention
  • Enhanced Accessibility

Additionally, there is discussion surrounding the potential introduction of a patent box regime, offering preferential tax rates for income derived from intellectual property. However, it raises pertinent questions about competitiveness enhancement, taxes, and regulations.

As Canada charts its course towards a more dynamic innovation ecosystem, collaboration and dialogue are paramount. The ongoing consultations present a unique opportunity for stakeholders to shape the future of R&D support frameworks, ensuring they are robust, inclusive, and conducive to sustained innovation and growth.

Have questions about the SR&ED program and how these changes may impact you? Reach out to our experts today!


The CRA Launches Consultations on SR&ED – 2024


Nicole Mirabal
Nicole Mirabal

Brand Content Specialist

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