The 2025 Federal Budget introduced the most significant expansion to Canada’s SR&ED program in more than a decade. With higher refundable limits, broader eligibility, restored capital expenditure support, and a modernized review process, innovative companies—especially in AI, cleantech, software, robotics, and life sciences—stand to benefit substantially.

Below is a concise, expert-level breakdown written for founders, CFOs, engineering leaders, and R&D-driven organizations.

1. Enhanced Refundable SR&ED Limit Increased to $6 Million

The enhanced SR&ED expenditure limit has been raised to $6 million, nearly double the historical $3M cap.

This means:

• Up to $6M of eligible R&D spending can now earn the 35% refundable SR&ED credit
• Eligible public companies may also access this enhanced rate
• Scaling startups and mid-market companies will receive significantly higher cash refunds

This update directly improves cash flow for high-growth innovators.

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2. More Mid-Sized Companies Now Qualify for the Enhanced Credit

The government widened the taxable capital range for the enhanced 35% credit.

Old phase-out: $10M–$50M
New phase-out: $15M–$75M

This is a major change for growing companies that previously “phased out” of the enhanced tier too early. Many businesses will now regain access to a higher refundable rate as they scale.

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3. Certain Public Companies May Now Receive Enhanced Credits

For the first time, some publicly listed Canadian companies may qualify for the enhanced refundable SR&ED credit.

This opens the door for:

• Public tech companies
• Cleantech and manufacturing firms
• Medical and health sciences companies

It dramatically expands the reach of SR&ED beyond just private corporations.

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4. Capital Expenditures Are Once Again SR&ED-Eligible

Capital expenditures—removed from SR&ED eligibility in 2014—are now back in the program.

Potential eligible capital includes:

• R&D machinery and equipment
• Prototyping hardware
• Laboratory infrastructure and testing rigs
• Specialized tools or devices primarily used for SR&ED

This shift benefits hardware-focused industries where equipment costs are substantial.

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5. SR&ED Administration Is Being Modernized

The CRA is moving toward a more streamlined and predictable SR&ED experience.

Key improvements include:

• Voluntary pre-claim approval program (technical validation before filing)
• More automation for faster processing
• Reduced review cycle times
• Clearer guidance and simplified interactions with CRA

This will lower administrative burden and create more certainty for claimants.

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6. What Companies Should Do Now

Even before legislation fully takes effect, businesses should begin preparing:

• Recalculate SR&ED projections using the $6M enhanced limit
• Review group structures to confirm enhanced eligibility
• Identify capital equipment that may become SR&ED-eligible
• Strengthen documentation, timesheets, and experiment evidence
• Align SR&ED with IRAP, AI/compute funding, and provincial incentives

Proper planning now ensures you maximize benefits under the upgraded 2025 rules.

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How GovMoney.ca Can Help

GovMoney.ca is built to help founders, CFOs, and R&D leaders capture every dollar available under the new SR&ED framework.

We provide:

✔ Automated SR&ED Readiness

AI-powered tools to track R&D activities, hours, and technical evidence—built specifically to meet CRA’s new documentation expectations.

✔ Funding Strategy Across All Programs

We integrate SR&ED with IRAP, AI Compute funds, clean tech incentives, and provincial programs to ensure you don’t leave money on the table.

✔ Expert Preparation & Audit-Ready Support

From technical narratives to financial costing, GovMoney aligns your claim with CRA’s updated rules and ensures audit-proof compliance.

✔ Fast, Transparent Filing

Designed for startups and scaling companies who want SR&ED with zero friction, zero confusion, and maximum refund potential.

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If you want a free SR&ED planning session or want to review how the Budget 2025 changes affect your next claim, GovMoney.ca is ready to help.

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https://calendly.com/govmoney-info/30min

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