Eligible Canadian Public Corporations & SR&ED
Historically, only Canadian Controlled Private Corporations (“CCPC”) have been eligible to claim Scientific Research & Experimental Development (“SR&ED”) tax incentives. However, now eligible Canadian public corporations (i.e., publicly‑listed but not foreign‑controlled) can claim the enhanced 35% refundable SR&ED credit on up to $4.5 million of qualifying expenditures.
Public companies can now receive a fully refundable 35% tax credit – matching CCPCs – on their first $4.5 M of qualifying SR&ED expenditures. Expenditures beyond that revert to the basic 15% (non-refundable) rate.
This applies to tax years beginning December 16, 2024, onward.
What is an Eligible Canadian Public Corporation?
Resident in Canada
The corporation must be a taxable Canadian corporation that is resident in Canada.
Publicly Listed
The company must be a public corporation, generally meaning it’s listed on a designated Canadian or foreign stock exchange (e.g., TSX, NYSE, NASDAQ). This marks a key shift from the past, when only Canadian-controlled private corporations qualified for refundable credits.
Not a CCPC
Even though the enhanced refundable SR&ED credit was historically limited to CCPCs, Budget 2024 expanded eligibility to include certain non-CCPCs, such as public corporations, provided they meet specific gross revenue thresholds.
Gross Revenue Criteria (Phase-Out Rule)
Eligibility for the enhanced refundable credit phases out based on the corporation’s average gross revenue over the previous three taxation years.
Active Business Requirement
The company must be engaged in active business activities in Canada, including eligible SR&ED work, and be able to demonstrate that the work meets the SR&ED program’s technical and scientific eligibility criteria.
SpenceDrake Tax Law – Tax Lawyers
Disclaimer
Each article/blog post is only meant to provide general information. It is posted on a specific date. Laws and rules change. Please know that it may be out of date. It is not meant to provide legal advice, and it does not provide legal advice. It cannot be relied on. Every tax situation is unique, and that may mean situations differ from this article/blog. If you have legal questions, please consult a lawyer.