How much is an SR&ED claim worth? A 2026 worked example

How much an SR&ED claim is worth depends on four numbers: what you spent, how much of that survives the CRA's adjustments, which credit rate applies, and how much of the resulting credit arrives as cash instead of a carryforward. Multiply the first by the third and you get the number most people quote. It is rarely the number that reaches the bank account. Bill C-15 moved the rate threshold and put capital spending back in the base this year, so the rules of thumb that worked in 2024 now understate some claims and overstate others.

The calculation below runs end to end on a hypothetical company. The method is sourced; the company is not real.

At a glance

• The enhanced federal credit rate is 35%, and the basic rate is 15% (CRA).
• The annual expenditure limit for the 35% rate doubled from $3 million to $6 million for tax years beginning after December 15, 2024. Bill C-15 received Royal Assent on March 26, 2026 (CRA SR&ED news and updates).
• That limit now grinds down between $15 million and $75 million of prior-year taxable capital, up from $10 million and $50 million.
• SR&ED capital expenditures made after December 15, 2024 are eligible again. The credit earned on them is only 40% refundable, against 100% on current expenditures (CRA rate and refund table).
• Ontario's innovation tax credit is 8% on a $3 million expenditure limit. The Ministry of Finance page still showed those figures when it was last updated on November 27, 2024, so the federal increase has no provincial counterpart there (Ontario).
• Form T661 is due 12 months after your T2 filing due date, which is 18 months after year end. Miss it and the expenditure is deemed not to be SR&ED at all (ITA 37(11) and 37(12)).

How much is an SR&ED claim worth in 2026?

For a Canadian-controlled private corporation under the expenditure limit, the federal credit is 35% of qualified expenditures, and nearly all of it is paid out in cash even when the company owes no tax. Qualified expenditures are not the same thing as what you spent, though, and that gap is where most back-of-envelope estimates go wrong.

A worked example: an Ontario software company

Take a software company with a December 31 year end that does all of its development in Ontario. It is a CCPC, it has never been profitable, and its taxable capital sits well under $15 million, so it gets the full $6 million expenditure limit. Every figure below is illustrative.

2026 spending	Amount
Salaries of employees directly engaged in SR&ED	$900,000
Arm's-length Canadian subcontractor	$150,000
Materials consumed in the work	$40,000
Test rig acquired in March, used almost entirely for SR&ED	$120,000
Cash out the door	$1,210,000

Step 1: turn spending into qualified expenditures

The company elects the proxy method, so rather than tracking overhead it adds a prescribed proxy amount of 55% of the salaries of directly engaged employees (Regulation 2900(4)). On $900,000 of salary that is $495,000.

One adjustment cuts the other way. Only 80% of an arm's-length SR&ED contract counts, so the $150,000 subcontractor becomes $120,000 (ITA 127(9)).

Current qualified expenditures come to $1,555,000, being salary plus proxy plus materials plus the trimmed contract. Capital qualified expenditures are the $120,000 rig. Total: $1,675,000. Notice what the proxy did. The company put out $1,090,000 of current cash and claims $1,555,000 of current qualified expenditure.

Step 2: subtract the provincial credit

Ontario pays a refundable 8% on qualified expenditures for SR&ED carried out in Ontario. Our company is under the $3 million Ontario limit, had no taxable income last year and holds taxable capital under $25 million, so nothing grinds. Ontario pays 8% of $1,675,000, or $134,000.

Federally, that provincial credit is government assistance and comes off the base before the credit is calculated (CRA). Taking 8% out of each bucket leaves $1,430,600 of current and $110,400 of capital qualified expenditure.

Step 3: apply the rates and see what is actually cash

At 35%, the current expenditures earn $500,710, and the whole credit is refundable. The capital earns $38,640, of which 40% is refundable. That is $15,456 in cash and $23,184 sitting as a non-refundable credit that carries forward.

Cash this year: $500,710 plus $15,456 plus the $134,000 from Ontario, so $650,166 against $1,210,000 of SR&ED spending. Roughly 54 cents on the dollar, with $23,184 parked for a profitable year that has not arrived yet.

Capital came back, and it is the weakest dollar in the program

Put the $120,000 rig next to $120,000 of extra directly engaged salary and the difference is hard to unsee.

Salary picks up $66,000 of proxy, so $186,000 of current qualified expenditure. Ontario pays $14,880, the federal credit is 35% of the remaining $171,120, or $59,892, and every cent of it is refundable. Cash back: $74,772, about 62%.

The rig generates $120,000 of qualified expenditure. Ontario pays $9,600, the federal credit is $38,640, and only $15,456 of that is refundable. Cash back: $25,056, about 21%.

Same $120,000, almost three times the cash if it goes to a person instead of a machine.

This is not an argument against buying equipment. You end up owning a rig, and the leftover $23,184 keeps its value if the company ever turns a profit. But if you have been deferring hardware purchases waiting for the capital rules to come back, do not budget them at 35%. They are worth roughly a fifth in the year you spend, and the rest is a bet on future taxable income.

What Ontario did not do

The Ontario credit still sits on a $3 million expenditure limit and phases out on prior-year taxable income above $500,000 and taxable capital above $25 million. Those thresholds are the shape of the old federal rules. A company that just gained access to a larger federal limit gets nothing extra from Ontario, so the combined effective rate falls as a claim grows past $3 million. That is the opposite of the impression the federal announcement leaves. Provincial credits differ enough to change where you do the work, which is why we compared the main ones separately.

Frequently asked questions

How much of an SR&ED claim comes back as cash?

For a CCPC under its expenditure limit, the credit earned on current expenditures is 100% refundable, and the credit on capital expenditures is 40% refundable. A CCPC over its income limit, or any corporation that is not a CCPC or an eligible Canadian public corporation, gets less.

What is the SR&ED expenditure limit for 2026?

It is $6 million, up from $3 million, for tax years beginning after December 15, 2024. The limit shrinks once prior-year taxable capital passes $15 million and reaches nil at $75 million.

Do I get 35% of my R&D salaries back?

Not exactly. The 35% applies to qualified expenditures, not to payroll. The proxy adds 55% of directly engaged salary on top, and provincial credits come off the base first. In the example above each salary dollar returned about 62 cents in cash, and each capital dollar about 21 cents.

When is the SR&ED filing deadline?

Twelve months after your T2 filing due date, so 18 months after your year end. There is no relief for missing it, which is why it belongs in a deadline tracker rather than a memory.

Can public companies claim the 35% rate now?

Yes. Eligible Canadian public corporations can earn the enhanced 35% rate for tax years beginning after December 15, 2024, which is new under Bill C-15.

The arithmetic is the easy part

None of the above is hard math. The hard part sits upstream, in deciding which salaries were directly engaged rather than merely adjacent, which contracts were genuinely arm's length, and whether the rig really was used all or substantially all for the work. Those get settled by what you wrote down during the year, not by what you can reconstruct in month seventeen. Run the calculation on a thin record and it will still produce a confident-looking number, which is the part that should worry you.