Canada proposes SR&ED relief for commercialisation costs

The proposal is not enacted law, so the new cost categories should not yet be treated as claimable. Tests, technological validations and studies undertaken to meet regulatory requirements for the initial approval or certification needed to commercialise a product or process would qualify only where they directly relate to a project already eligible under the existing SR&ED rules. Eligible cost types would follow the existing programme, including wages and salaries, materials, contract costs, overhead, and machinery and equipment.^[1]

IP registration and maintenance

Reasonable costs to register and maintain protection for qualifying IP developed in an eligible SR&ED project would also be included. Covered rights would comprise patents, certificates of supplementary protection, plant breeders’ rights and copyrighted software under Canadian or equivalent foreign law. Application preparation, filing and recurring maintenance costs may qualify, but infringement litigation and costs not directly connected with obtaining or maintaining protection would not. Foreign IP-office fees would be included, while supporting work such as preparing an application would qualify only if performed in Canada.^[1]

If supported IP were later disposed of, recapture would apply to the related deduction and investment tax credit. The commencement rule is expenditures incurred in taxation years beginning on or after Budget Day, 5 November 2026—not simply any expenditure incurred after that date. The Canada Revenue Agency is expected to provide sector-specific guidance on commercialisation eligibility.^[1][2]

Prepare, but do not claim yet

Canadian corporations and other SR&ED claimants should map fiscal-year starts, identify regulatory-validation work and qualifying IP costs linked to eligible projects, and retain evidence of the project connection, work location and cost allocation. The reviewed materials do not provide the future CRA guidance, detailed boundary tests for ‘initial’ approval, or revised claim forms. Enactment, final clause wording and the wider Budget 2026 business-tax package remain separate from this focused proposal.^[1][2]