With Bill C-15 receiving Royal Assent, previously shared SR&ED program enhancements and the Clean economy investment tax credit (ITC) changes are now officially enacted. Read below for a detailed summary of these improvements, enhancements, and changes.
1. SR&ED Program Enhancements
Bill C‑15 introduces some of the most substantial SR&ED reforms in over a decade, reversing earlier restrictions and significantly expanding access and refundability. These enhancements generally apply to tax years beginning on or after 16 December 2024.
1.1 Increased Expenditure Limit for the 35% Refundable Credit
- The annual SR&ED expenditure limit eligible for the 35% refundable investment tax credit (ITC) is doubled from CA$3 million to CA$6 million.
- This increase applies to:
- Canadian-controlled private corporations (CCPCs), and
- Eligible Canadian public corporations (see refundability expansion below).
- Notably, the final enacted limit is higher than previously proposed (CA$6m instead of CA$4.5m discussed in earlier draft legislation and the 2024 Fall Economic Statement).
Implication:
Corporations can now receive up to CA$2.1 million in refundable Federal SR&ED credits annually (35% × CA$6m), substantially improving cash flow for R&D‑intensive businesses.
1.2 Higher Phase-Out Thresholds
The taxable capital thresholds that reduce access to the enhanced 35% credit are significantly expanded:
- Lower threshold: Increased from CA$10 million to CA$15 million
- Upper threshold: Increased from CA$50 million to CA$75 million
These thresholds determine when the CA$6m SR&ED expenditure limit begins to phase out.
- CCPCs continue to have the option to calculate eligibility using an alternative basis (rather than taxable capital).
- For certain corporations (see below), revenue-based metrics may apply instead.
Implication:
Mid-sized corporations that were previously fully or partially phased out may now qualify for a larger refundable SR&ED claim.
1.3 Expansion of Refundability to Canadian Public Corporations
For the first time, the 35% refundable SR&ED ITC is extended beyond CCPCs:
- Eligible Canadian public corporations may now claim the refundable 35% credit, up to the CA$6m expenditure limit.
- This treatment also applies to CCPCs that elect into the alternative eligibility regime.
1.4 Reinstatement of Capital Expenditure Eligibility
A major structural reversal restores rules that existed prior to 2014:
- Capital expenditures are once again eligible for:
- The SR&ED income deduction, and
- The 35% SR&ED ITCs.
- Applies to:
- Property acquired after 15 December 2024, and
- Lease costs incurred after that date.
This reinstates eligibility for capital used directly in SR&ED activity (e.g., specialized equipment or infrastructure).
Implication:
Capital‑intensive R&D—such as advanced manufacturing, clean tech piloting, and applied engineering—becomes significantly more attractive and financially viable in Canada.
2. Clean Economy Investment Tax Credit (ITC) Changes
Bill C‑15 introduces expansions and technical refinements to Canada’s suite of clean economy ITCs, with key changes affecting eligibility, scope, filing timelines, and infrastructure coverage.
2.1 Clean Electricity Investment Tax Credit
Implementation and Effective Dates
- The Clean Electricity ITC is formally implemented, effective 16 April 2024.
Expanded Eligible Claimants
Eligibility is broadened to include major federal investment entities:
- Canada Growth Fund Inc.
- Applies to eligible property acquired and available for use on or after 4 November 2025.
- Canada Infrastructure Bank
- Applies to eligible property acquired and available for use on or after 16 December 2024.
Importantly:
- Financing from these entities does NOT reduce the cost base of eligible property when calculating the ITC.
Additional Technical Changes
- Clarifies what qualifies as nuclear energy property under eligible clean electricity assets.
- Extends deadlines for late filing of prescribed ITC claim forms.
- Makes various consequential and technical amendments.
Notably, conditions that were previously proposed for provincial Crown corporations were removed by Budget 2025 and are not included in Bill C‑15.
Implication:
Large‑scale clean electricity projects—particularly those involving nuclear, grid-scale infrastructure, or federal co‑investment—receive clearer and more generous tax support.
2.2 Clean Technology Manufacturing ITC
Key enhancements include:
Expanded Critical Minerals List
Five minerals are newly added as eligible inputs:
- Antimony
- Gallium
- Germanium
- Indium
- Scandium
Applies to property acquired and available for use on or after 4 November 2025.
Extended Filing Deadlines
- The deadline to file the prescribed form to claim the credit is extended to:
- The later of 31 December 2026, or
- One year after the corporation’s tax return due date.
Implication:
This change supports advanced manufacturing, semiconductor supply chains, battery technology, and strategic mineral processing operations in Canada.
2.3 Broader Clean Economy ITC Technical Amendments
The bill also includes cross‑cutting clean economy ITC refinements:
- New coordination rules where multiple clean economy ITCs could apply to the same property (avoids over‑claiming).
- Clarifications to environmental compliance requirements across clean energy property classes.
- Additional extensions of late‑filing relief for prescribed ITC forms.
Overall Takeaway
Combined, these measures signal a material strengthening of Canada’s innovation and clean economy tax infrastructure:
- SR&ED is broadened, more refundable, and better aligned with modern R&D realities.
- Clean economy ITCs are expanded to support:
- Federal co‑investment,
- Nuclear and electricity infrastructure,
- Advanced manufacturing and critical minerals.
Book a call with one of our expert advisors to discuss how these changes might benefit your business.
