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Canadian Chamber Submission: Consultation on SR&ED Program

Canadian Chamber Submission: Consultation on SR&ED Program

Our recommendations for improvements to the Scientific Research and Experimental Development (SR&ED) tax incentives in Canada.

On April 15, the Canadian Chamber of Commerce submitted recommendations to the Department of Finance in response to the consultation on improvements to the Scientific Research and Experimental Development (SR&ED) tax incentives in Canada. These recommendations are focused on encouraging businesses to conduct research and development (R&D) within the country, thereby fostering innovation, economic growth and competitiveness. 

Read the full submission below.

April 15th, 2024

Maximilian Baylor
Director General, Business Income Tax Division
Tax Policy Branch
90 Elgin Street
Ottawa ON K1A 0G5

RE: Canadian Chamber Submission: Consultation on SR&ED Program

Delivered via email:

Dear Mr. Baylor:

The Canadian Chamber of Commerce is pleased to respond to the Department of Finance’s consultation on improvements to the Scientific Research and Experimental Development (SR&ED) tax incentives, intended to encourage businesses to conduct research and development in Canada.

The Canadian Chamber of Commerce is the country’s largest business association with a network of over 400 chambers of commerce and boards of trade representing nearly 200,000 businesses of all sizes, in all sectors and regions of our country.

The Importance of Innovation Competitiveness

Developing and commercializing new technologies is crucial for Canadian businesses to succeed in the 21st-century economy.

In 2018, the Canadian Chamber of Commerce published 10 Ways to Build a Canada that Wins1, outlining a 10-part strategy to support business growth and build a winning economy. The report stressed the importance of de-risking the development, adoption, commercialization, and production of new technologies and facilitating access to capital to enable these aims. Following the pandemic, these priorities have become increasingly urgent.

Successive governments have committed to improving national innovation competitiveness through various initiatives, including platforms like the Industrial Research Assistance Program, the Strategic Innovation Fund, Regional Development Agencies, the Trade Commissioner Service, and numerous tax incentives.

A recurrent failure to improve on various economic metrics shows that governments must commit to a more accessible and less prescriptive approach to improving innovation competitiveness.

Key Concerns

Although the Department of Finance has requested cost-neutral proposals to improve the SR&ED program, the Canadian Chamber believes that meaningful improvements may not be attainable with this restrictive criterion. Nonetheless, we have included recommendations that will not necessarily increase costs to government. The Department has also opened a parallel consultation on a patent box regime. The SR&ED program should be considered separate and independent from any patent box regime, including costing.

Our members report that the audit component of the SR&ED Program has become onerous and time-consuming and that overly frequent changes have hampered its uptake and efficiency. The program must be made easier to access for organizations of all sizes. The Chamber’s proposed recommendations centre around refinements to the program that support its efficiency, effectiveness, and accessibility.

For example, the existing tax rules create an unintended disparity by providing Canadian-controlled private corporations (CCPCs) with access to incentives that are not available to publicly listed companies. This creates an artificial barrier to growth for our publicly listed SMEs, a group that constitutes the majority of Canadian public companies.

This unique characteristic of our capital markets distinguishes us from the rest of the world and warrants special consideration in the formulation of tax policies.

In the Canadian context, publicly traded companies are predominantly smaller enterprises, contrary to the common perception of large multinational corporations.

Incorporating this nuance of our capital markets into policy considerations, particularly when it comes to encouraging innovation, is essential in encouraging growth. The current restrictions on publicly listed companies accessing incentives for research and development spending hinder their ability to unlock their full growth and innovation potential, which, in turn, impacts our nation’s economic development.

Proposed Recommendations

To achieve the Government of Canada’s intent to ensure that the SR&ED program is effective in encouraging R&D that benefits Canada, and second, to explore opportunities to modernize and simplify it, the Canadian Chamber of Commerce puts forward the following recommendations:


  • Simplify the SR&ED application process so that Canadian companies of all sizes can confidently move forward with bringing their innovations to market.
    • Change the filing requirements to a simpler system, such as category-based or check-the-box.
  • Rapidly expand the pre-approval process for R&D activities to de-risk the post-activity audit process (aligned with the United States’ approach).
  • Enhance government auditors’ training so that they better understand the operations and needs of the Canadian business community.
  • Change the requirements for Form T661. The government should consider reducing documentation requirements and simplifying the reporting method for projects outside of the top 20.
  • Harmonize the SR&ED regime across all provinces to ensure consistent application. Allow taxpayers to file a consolidated claim for projects undertaken by entities under common control.

Increasing Accessibility and Eligibility Predictability

  • Develop additional clarity for eligibility requirements, beyond what is established by the Income Tax Act.
  • Clearly define intended program outcomes with measurable targets.
  • Refine the dispute resolution system to be more predictable, clear, effective and efficient.
  • Create a streamlined audit framework for both government and industry to follow, which would eliminate uncertainties and delays, while investing in training for technical auditors.


  • Restore the SR&ED investment tax credit rate to 20%.
  • Expand the list of eligible activities beyond the early stages of R&D and include new innovations and product improvements.
  • Modernize program eligibility definitions to make the SR&ED credit refundable for all, regardless of whether companies are private or public.
  • Make the SR&ED credit fit within the definition of a qualified refundable tax credit (QRTC) under the Global Minimum Tax Act (GMTA).
  • Restore the eligibility of capital expenditures.
  • Change the SR&ED credit carryforward period from 20 tax years to an indefinite period.


The Canadian Chamber believes that Canada must eliminate barriers to growth and help companies innovate and grow, thus enabling them to contribute more effectively to our economic prosperity. The Canadian Chamber supports the Government of Canada’s intention to review the SR&ED program. An efficient, effective and accessible SR&ED program will serve to enhance Canada’s economic growth and we believe that close and continued collaboration with businesses across the country will provide critical insight into the application and success of the program. We are happy to answer any additional questions you may have or facilitate further consultation with businesses from coast to coast to coast.


Alex Greco
Senior Director, Manufacturing and Value Chains

Jessica Brandon-Jepp
Senior Director, Financial and Fiscal Services Policy

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