Budget 2026: SR&ED opens up to certification and intellectual property protection

The federal budget tabled on November 5, 2026, expands SR&ED to two new categories of expenditures: testing to obtain initial regulatory certification and the costs of protecting intellectual property resulting from your R&D work. The rates remain the same, at 35% for the enhanced credit for eligible corporations and 15% for the general rate. The new measures apply to taxation years that begin on or after Budget Day. For an SME with a December 31 year-end, this means as of January 1, 2027.

For manufacturers who develop a product and then have to have it certified, this is a concrete change. A portion of the costs incurred between the end of R&D and marketing can now be claimed, provided that this work is well documented, starting now.

What the 2026 budget changes to SR&ED

The budget does not create a new credit. It expands the activities and expenditures eligible for the existing program, with no separate rates or limits specific to the new elements. Three measures directly affect companies that claim SR&ED:

• Regulatory certification testing becomes an eligible activity.
• Intellectual property protection costs become an eligible expense.

The government estimates the cost of these measures at $930 million over five years, or about $235 million per year once fully implemented. This expansion targets the prototype to market stage.

Regulatory certification: new eligible activities

The budget covers testing, technology validation and studies conducted to meet regulatory requirements for the initial approval or certification required to commercialize a product or process.

There are two conditions governing this measure. First, these activities must be directly related to a project that is already eligible under the current SR&ED rules. Certification alone, without an upstream R&D project, is not eligible. Second, only the initial approval or certification is concerned: subsequent renewals and recertifications seem to be excluded.

The types of expenditures that can be claimed are the same as for the rest of the SR&ED: salaries, materials, contracts, capital expenditures under certain conditions.

Case in point: A North Shore manufacturer is developing a new ventilation system and conducting an SR&ED project to resolve an uncertainty about thermal performance. Once the prototype has been validated, it must obtain CSA certification before sale. The hours of its technicians devoted to the tests required by the CSA, the materials sacrificed during the tests and the costs of the external laboratory could be claimed, provided they are related to the initial project.

Intellectual property: patent fees can now be claimed

The second measure concerns the costs of registering and maintaining intellectual property protection. Only IP resulting from an eligible SR&ED project is covered: patents, certificates of supplementary protection, plant breeders’ rights or software protected by copyright, in Canada or abroad.

Eligible costs include:

• preparation and filing of the application;
• periodic maintenance of protection fees;
• fees paid to a foreign IP office.

Three limitations to remember. Support work, such as drafting the patent application, is only eligible if it is done in Canada. Costs to enforce your rights, such as an infringement lawsuit, are excluded. Finally, if the IP is sold later, the deduction and credit obtained are recovered by the CRA.

Case in point: a technology SME in Laval files a patent in Canada and the United States for a control system developed as part of an SR&ED project. The fees of the Canadian patent agent and the fees paid to the two offices could be eligible. If the preparation of the application were entrusted to an American firm, these fees would not be eligible. For software, copyright protection is concerned.

When do the new measures apply?

The certification and IP measures apply to taxation years beginning on or after November 5, 2026. The actual date depends on your fiscal year-end:

These are still budget proposals. They must be passed by Parliament. The CRA also plans to publish sector-specific guidelines on marketing expenses, which will specify the limits in practice.

And in Quebec, what about the CRIC?

The federal budget does not specify how Quebec will treat these new expenditures under the Research, Innovation and Commercialization Tax Credit (CRIC) [URL of the CRIC article to be confirmed]. The CRIC already covers certain pre-marketing activities, but the alignment with the new federal rules has yet to be confirmed by Revenu Québec.

Until then, we recommend documenting your certification work and IP fees so that they can be presented at both levels.

Reminder: 2025 changes are already in effect

Budget 2026 builds on last year’s enhancements, which already apply to:

• $6 million annual expenditure limit for the 35% increased credit;
• expanded access to the enhanced credit to eligible Canadian public corporations and the previous year’s taxable capital threshold increased from $15 million to $75 million;
• return of eligibility for capital expenditures, such as R&D equipment.

For a complete picture of the rates and limits, see our article on SR&ED in 2026 [SR&ED article URL to be confirmed].

What you should do now

Even if the measures only apply to the next tax years, solid files are built during the work. If you are planning a certification (CSA, UL, CE marking, Health Canada, Transport Canada) or a patent application for a product resulting from R&D, here are the reflexes to adopt:

• Document certification testing as a separate block: protocols, times, results. They should remain separate from technological uncertainty and experimentation, while still being clearly linked to the eligible project.
• Keep track of the relationship between the IP and the SR&ED project: which project led to which invention, on what date.
• Check where support work is being done for your patents: only those done in Canada will be eligible.
• Plan your expenses according to your year-end so you know when they will become claimable.

This is the type of documentation that our team structures throughout the year with our clients as part of our SR&ED tax credit support. If your project is on its way to market, our technology commercialization service and R&D financing solutions can also accompany you between prototype and sale.

What Progrès Conseils can do for you to maximize your tax credit:

• Review your claims strategy in light of the new measures: which projects in progress will lead to certification or patent filing, and from which tax year these expenses will become claimable with you.
• Identify new eligible expenses in your current projects: tests required by the certification body, patent agent fees, filing and maintenance fees — clearly separating what is targeted from what is not.
• Optimize your documentation system so that certification tests and IP fees are traceable and linked to the right project, without burdening your teams.
• Prepare the technical and financial aspects and file the claim (T661 and Quebec forms) and accompany you in the event of a CRA technical review.
• Work with your accountant.

Conclusion

Budget 2026 extends SR&ED beyond the prototype. With the addition of initial regulatory certification and IP protection fees, the program covers more of the path to market for projects that are already eligible. SMEs that document this work today will be able to claim it in their first year of action, once the measures are in place.

Want to know if your certification or patent projects may be eligible? Book a free eligibility analysis with our team. Progrès Conseils has been assisting SMEs with their SR&ED claims since 2003.

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