SR&ED 2.0: How the Recent Proposed Changes Could Rewrite Your Claim Strategy

Introduction

The 2025 draft legislation proposes the most sweeping SR&ED reforms in years. From expanded eligibility to reinstating capital cost inclusion, the changes may alter your claim roadmap—and your risk profile.

Below we walk through what’s changing, how it matters, and actionable steps to prepare.

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Proposed Key Changes

1. Higher Enhanced Credit Limit for CCPCs
   
   • The $3 million ceiling may expand to $4.5 million
2. Broader Phase-Out Range
   
   • The taxable capital band may shift to $15M–$75M
3. Capital Expenditure Inclusion
   
   • Equipment / property used substantially in R&D could again qualify
4. Public Corporation Access
   
   • Some Canadian public companies may now access refundable 35% credit
5. Optional Phase-Out via Revenue
   
   • Companies may choose to phase out by gross revenue instead of capital

These proposals apply for tax years on or after Dec. 16, 2024, subject to final enactment and interpretation.

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Strategic Impacts & Considerations

• Revisit CapEx plans: If you shelved equipment acquisitions, they may now be worth re-evaluating
• Project timing: Some R&D may shift to years where draft rules apply
• Entity structuring: Review your corporate structure to see which entity should carry the R&D
• Documentation readiness: Ensure your lab equipment usage logs are robust to support mixed-use allocation

Risks & Cautions

• The legislation is draft only—final rules may differ
• CRA may apply transition audits or stricter scrutiny
• Mixed-use equipment will require precise usage logs
• Provincial SR&ED interactions still matter

Scenario Modeling

• Model claims under both current and draft rules
• Simulate CapEx usage vs exclusion in both regimes
• Identify “pivot years” where claim advantage flips

Implementation Roadmap

1. Catalogue your R&D equipment and assets
2. Enhance usage logging to track experimental vs production use
3. Prepare alternative project schedules
4. Strengthen existing documentation for ambiguous or marginal projects

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‍Example

A firm planning to buy a $200,000 test rig postponed it under old rules. Under draft rules, if 70% of usage is R&D, $140,000 might count. Modeling the difference helped them decide to accelerate that purchase into the transition year.

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How GovMoney Can Help

We deliver a Change Impact Assessment, simulating your claim under old and new regimes, refining CapEx decisions, updating your project plans, and advising on audit posture during transition.