Canada’s federal Scientific Research and Experimental Development tax incentive program has undergone its most significant expansion in years. However, the provincial response has been uneven.
For taxation years beginning on or after December 16, 2024, qualifying Canadian-controlled private corporations and eligible Canadian public corporations may earn the enhanced 35% federal investment tax credit on up to $6 millions of qualified SR&ED expenditures, subject to the applicable expenditure-limit rules. The previous maximum was $3 million.
The federal taxable-capital phase-out range has also increased from $10 million to $50 million to a new range of $15 million to $75 million. The changes received Royal Assent on March 26, 2026.
Capital expenditures have also been restored under separate transitional rules. These rules generally apply to eligible property acquired after December 15, 2024, and qualifying lease costs that first become payable on or after that date.
These federal changes do not automatically produce the same result provincially. Each province maintains its own rates, expenditure definitions, refundability rules, and corporate eligibility requirements.
Provinces Retaining Separate SR&ED Program Structures
Alberta
Alberta’s Innovation Employment Grant operates independently from the federal enhanced SR&ED credit.
The IEG generally provides:
- An 8% refundable benefit on eligible Alberta R&D expenditures up to a corporation’s historical base level.
- An additional 12% benefit on eligible expenditures above the historical base, producing a combined rate of up to 20% on that incremental portion.
- Benefits on up to $4 million of annual eligible expenditures.
A corporation’s base level is determined using its average qualifying R&D expenditures over the preceding two years.
Following the federal legislative changes, Alberta published updated IEG guidance on June 30, 2026. The province confirmed that the existing IEG framework continues to apply and provided directions for using expenditure amounts from the revised federal Form T661.
Alberta has not adopted the federal $6 million expenditure limit. Its IEG continues to apply to a maximum of $4 million of annual eligible expenditures.
What to expect: Alberta has confirmed the continued operation of the IEG under the revised federal reporting environment. Its published technical guidance does not announce a broader expenditure limit or wholesale adoption of the federal capital-expenditure rules.
Manitoba
Manitoba continues to provide a 15% R&D tax credit under its own provincial rules.
Eligible Manitoba expenditures include current expenditures and certain capital expenditures for depreciable property. Buildings and leasehold interests in buildings are excluded. Manitoba’s recognition of certain capital costs predates the recent federal restoration.
The credit is fully refundable when eligible R&D is undertaken under an eligible contract with a qualifying Manitoba research institute. For other eligible R&D, 50% of the credit is refundable and the remaining 50% is non-refundable.
Manitoba does not use the federal enhanced-credit expenditure limit. The federal increase to $6 million therefore does not create an equivalent new Manitoba limit.
Ontario
Ontario has not adopted the federal $6 million expenditure limit for the refundable Ontario Innovation Tax Credit.
The OITC remains an 8% refundable credit based on qualifying current expenditures incurred in Ontario, subject to a maximum annual expenditure limit of $3 million. Associated corporations must share the $3 million limit.
The expenditure limit begins to decline when:
- Prior-year federal taxable income exceeds $500,000 and is eliminated at $800,000.
- Prior-year specified capital reaches $25 million and is eliminated at $50 million.
Ontario also provides a separate 3.5% non-refundable Ontario Research and Development Tax Credit on eligible expenditures. Unused ORDTC amounts may generally be carried back three years or carried forward 20 years.
The current CRA guidance describes the OITC expenditure base as including 100% of qualifying current expenditures. It does not confirm that restored federal capital expenditures have been added to the refundable OITC base.
British Columbia: Express Alignment with the Federal Changes
British Columbia has provided the clearest provincial alignment with the new federal SR&ED rules.
For taxation years beginning after December 15, 2024:
- The maximum expenditure limit for the refundable B.C. credit increased from $3 million to $6 million.
- Eligible Canadian public corporations can access the refundable provincial credit.
- Capital expenditures have been restored as qualifying B.C. expenditures.
- The prior-year taxable-capital phase-out range increased to $15 million to $75 million.
Qualifying CCPCs and eligible Canadian public corporations can claim a refundable B.C. credit equal to 10% of the lesser of their qualifying B.C. expenditures or their applicable expenditure limit. Expenditures not included in the refundable calculation may qualify for the province’s non-refundable credit, subject to the provincial rules.
B.C. Budget 2026 also removed the credit expiry date, making the provincial SR&ED credit permanent.
Status: British Columbia has expressly aligned its provincial credit with the principal federal changes.
Saskatchewan: A Province-Specific Expansion
Saskatchewan has not fully adopted the federal package, but it has introduced its own meaningful enhancement.
For qualifying expenditures incurred on or after December 16, 2024, Saskatchewan CCPCs can claim a 10% refundable credit on their first $2 million of annual qualifying expenditures. The previous refundable expenditure threshold was $1 million.
Qualifying expenditures above the $2 million threshold, as well as qualifying expenditures incurred by other corporations, may be eligible for Saskatchewan’s 10% non-refundable R&D tax credit. The total refundable and non-refundable credits claimed by a corporation remain limited to $1 million annually.
Saskatchewan’s published rules retain a province-specific refundable threshold of $2 million for Saskatchewan CCPCs and do not identify eligible Canadian public corporations as qualifying for that refundable credit.
Status: Saskatchewan has expanded its own provincial program but has not fully aligned with the federal changes.
Quebec: A Broader Restructuring of Innovation Tax Assistance
Quebec has taken a different approach. Rather than simply adopting the federal changes, the province introduced the Tax Credit for Research, Innovation and Commercialization, commonly referred to as the CRIC.
The CRIC applies to eligible corporations for taxation years beginning after March 25, 2025. It covers eligible R&D activities and certain pre-commercialization activities undertaken in Quebec.
The credit generally provides a 20% refundable benefit on eligible expenditures above the applicable exclusion threshold. It was introduced as part of a broader restructuring that abolished or amended several previous Quebec tax measures.
Eligible pre-commercialization activities may include:
- Testing, technological validation, and studies required to obtain an initial regulatory approval or certification.
- Product design involving form, aesthetics, functionality, or material selection.
- Certain quality control activities required for an initial approval or certification.
These pre-commercialization activities must be connected to R&D work carried out in Quebec by the corporation or on its behalf.
Quebec’s definition of R&D is harmonized with the federal definition, and the CRA conducts the scientific review of the R&D work. However, the CRIC’s expenditure calculation, exclusion threshold, and pre-commercialization rules are governed by Quebec’s own program.
Status: Quebec has moved to a broader innovation and commercialization model rather than simply following the federal SR&ED amendments.
Existing R&D Credits Without Announced Full Alignment
New Brunswick, Newfoundland and Labrador, Nova Scotia and Yukon
These jurisdictions continue to offer refundable R&D credits based on eligible expenditures incurred within the province or territory.
- New Brunswick provides a 15% refundable credit on eligible R&D expenditures incurred in the province.
- Newfoundland and Labrador provides a 15% refundable credit on eligible R&D expenditures incurred in the province.
- Nova Scotia provides a 15% refundable credit on eligible R&D expenditures incurred in the province.
- Yukon provides a 15% refundable credit, plus an additional 5% for certain eligible expenditures paid or payable to Yukon University.
As of October 26, 2026, the official materials reviewed for New Brunswick, Newfoundland and Labrador, Nova Scotia and Yukon did not identify announcements that these jurisdictions had adopted the federal $6 million enhanced-credit limit, extended a special refundable regime to eligible Canadian public corporations, comprehensively aligned their credits with all new federal measures, or announced a uniform response to restored federal capital expenditures.
- Adopted the federal $6 million enhanced credit limit.
- Extended a special refundable regime to eligible Canadian public corporations.
- Comprehensively aligned their credits with all of the new federal measures.
- Announced a uniform response to the restoration of federal capital expenditures.
New Brunswick and Nova Scotia maintain property-recapture provisions in their credit rules, demonstrating that R&D property can be relevant to their respective calculations. However, these provisions do not establish that all of the new federal capital rules automatically flow through to every provincial credit.
Businesses should therefore verify capital costs, corporate eligibility and other expenditure categories under the legislation and claim schedule for the relevant jurisdiction.
Status: These jurisdictions continue to offer refundable R&D credits, but comprehensive alignment with the new federal package has not been officially confirmed.
Provincial Responses at a Glance
Expressly aligned with the principal federal changes
- British Columbia
Introduced a province-specific enhancement
- Saskatchewan
Retained a separate provincial structure
- Alberta
- Manitoba
- Ontario
- Quebec, although Quebec is more accurately described as having restructured its innovation tax assistance
Provinces that continue to offer an R&D credit, with no comprehensive alignment announcement identified
- New Brunswick
- Newfoundland and Labrador
- Nova Scotia
- Yukon
The Practical Takeaway
The federal SR&ED enhancements have not produced a uniform provincial response.
British Columbia has expressly aligned its provincial credit with the principal federal changes. Saskatchewan introduced its own targeted enhancement by increasing the refundable expenditure threshold for Saskatchewan CCPCs to $2 million.
Alberta, Manitoba and Ontario continue to operate under distinct provincial limits and expenditure rules. Quebec has introduced a broader innovation-focused model through the CRIC. New Brunswick, Newfoundland and Labrador, Nova Scotia and Yukon continue to offer refundable R&D credits, but comprehensive alignment with the new federal package has not been officially confirmed.
Businesses should not assume that the federal $6 million limit, eligible-public-company rules or restored capital provisions automatically determine the provincial result.
For companies operating in more than one jurisdiction, the analysis should consider each province separately, including:
- Where the SR&ED work was performed.
- Where employees and contractors performed their work.
- How expenditures are allocated among provinces.
- Whether the corporation qualifies for a refundable provincial credit.
- Whether capital expenditures are recognized under the specific provincial program.
- Provincial expenditure limits and phase-out thresholds.
- The treatment of provincial assistance when calculating the federal SR&ED claim.
The location of qualifying work and expenditures can materially change the combined federal and provincial benefit. Provincial credits should therefore be modeled separately rather than treated as a standard addition to the federal claim.
Curtis Griffith is the Vice President, Growth & Strategy at Copoint.
