Guide
SR&ED tax credit rates: the 35% enhanced rate and the 15% basic rate
Updated
Two rates, one limit, and a refundability rule that decides whether the credit is cash in the bank or a deduction against tax you may not owe yet.
The two rates
- Basic rate, 15%
- CRA states the basic ITC rate is "15% on qualified SR&ED expenditures", and it applies to corporations, individuals, trusts and partners alike. This is the rate on everything above a CCPC's expenditure limit, and the only rate for a claimant that is not a CCPC or an eligible Canadian public corporation.
- Enhanced rate, 35%
- Most CCPCs "may earn a refundable ITC at the enhanced rate of 35%" on qualified expenditures up to the expenditure limit. From tax years beginning after 15 December 2024 eligible Canadian public corporations have access to the enhanced rate too.
The mechanism in the statute is an addition rather than a separate rate: subsection 127(10.1) of the Income Tax Act adds "20% of the least of" the amount claimed, the SR&ED qualified expenditure pool and the corporation's expenditure limit, on top of the 15% basic credit (laws-lois.justice.gc.ca). 15 plus 20 is where the 35 comes from, and it is why the enhanced rate stops exactly at the expenditure limit.
How much comes back as cash
An investment tax credit reduces tax payable. Refundability is what turns it into money for a pre-revenue company. CRA's position for a qualifying CCPC is that "the ITC earned at the 35% enhanced rate on current expenditures is 100% refundable" and "the ITC earned on capital expenditures is 40% refundable" up to the expenditure limit, while above the limit qualifying and excluded CCPCs get a "40% refund of the ITC calculated at a rate of 15%" (CRA).
| Slice | Rate | Credit | Refundable |
|---|---|---|---|
| First $6,000,000 (the expenditure limit) | 35% | $2,100,000 | $2,100,000 |
| Remaining $2,000,000 | 15% | $300,000 | $120,000 |
| Total | 30% blended | $2,400,000 | $2,220,000 |
Whether your corporation meets the "qualifying corporation" test, and whether it is an excluded corporation under subsection 127.1(2), changes the refundable column. Those are questions for your tax adviser on your own numbers.
If the credit is not refunded
Unused credit is not lost. CRA states that claimants "may carry it back up to 3 tax years or carry it forward up to 20 tax years", so a credit earned in a loss year can still shelter tax in a profitable one.
Provincial and territorial credits
The federal credit is not the whole picture. CRA notes that "provincial and territorial R&D tax credits may also be available, although they will reduce the expenditures you can claim for SR&ED" (CRA). Rates, refundability and caps differ by province and we do not publish them here: check your own province's programme, because a provincial credit both adds to your total and shrinks the federal base it is calculated on.
Rates on this page were read from CRA and from the Income Tax Act on the updated date above. SR&ED policies and forms are being revised to match the legislation that received Royal Assent on 26 March 2026, so verify before you file.