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SR&ED in Québec: 5 Costly Myths for SMEs (and What's Changing in 2025-2026)

elegrinacohen
3 hours ago
3 min read

Every year, Québec SMEs that innovate as part of their everyday work without even realizing it miss out on the SR&ED tax credit. Not because they don't qualify, but because of myths that have been circulating for years.


Here are the five most costly myths, and what has actually changed in the program for 2025-2026:


Myth #1 — You need a lab to do SR&ED


This is probably the most widespread misconception. In reality, SR&ED doesn't depend on where the work happens, but on its nature: did someone spend time trying to solve a technical problem whose solution wasn't obvious from the start? That can happen at a desk with a single computer just as easily as in a lab. A developer testing several approaches to integrate AI into an existing system, or an engineer adapting a machine purchased abroad so it works in your plant these are potentially eligible activities.


Myth #2 — It's only for large companies


If anything, it's often the opposite. The credit rate decreases as a company's taxable capital increases smaller companies generally have access to the best rates. A young company with one or two full-time people actively developing a product can qualify, as long as it has real internal expenses (salaries, materials consumed, supervised subcontracting). The program sets no minimum threshold for years in business or team size.


Myth #3 — My accountant already takes care of it


A good accountant knows general tax rules well but SR&ED is its own language, with its own technical definitions, and those definitions change from year to year. A claim built on accounting alone, without a solid technical demonstration of the technological uncertainty and the process followed, risks leaving money on the table or holding up poorly under a closer review. It's not a question of competence, but of specialization: SR&ED requires speaking both the language of innovation and the language of tax.


Myth #4 — Filing an SR&ED claim is risky


Unlike a grant, where companies compete for a limited amount of funding, the SR&ED credit is a right set out in law: if your activities and expenses are eligible and well documented, you're entitled to it. A closer review of the file by tax authorities isn't a penalty it's an opportunity to demonstrate and have your work recognized. In the vast majority of cases, the amount claimed is accepted as filed or adjusted slightly; a full denial remains rare when the file is well built from the start. The CRA doesn't reimburse innovation. It reimburses a proven process.


Myth #5 — If I didn't track my hours, it's too late


An SR&ED claim is normally filed with the tax return, within six months of the end of the fiscal year but the law allows an amendment up to 18 months after that same year-end. In practice, if you've never claimed SR&ED before, it's often possible to cover two fiscal years at once by reconstructing the missing documentation. It's not the ideal situation (it's better to track hours and projects as you go), but it isn't a closed door either.


WHAT'S REALLY CHANGING IN 2025-2026


At the federal level, the expenditure limit eligible for the enhanced rate rose from $3 million to $6 million for taxation years beginning after December 15, 2024, with an enhanced refundable rate of 35% for CCPCs. In Québec, the former R&D salaries tax credit was replaced, for fiscal years beginning after March 25, 2025, by the new refundable Tax Credit for R&D, Innovation and Pre-Commercialization (CRIC), with a base rate of 20%, enhanced to 30% on the first million dollars of eligible expenses above the exclusion threshold. That threshold is the greater of $50,000 or an amount calculated based on the number of employees assigned to R&D and pre-commercialization.


At the federal level, capital expenditures tied to the acquisition of property are once again eligible. In Québec, CRIC goes further: certain pre-commercialization activities (regulatory testing, technological validation, product design) are now covered as well.


The exact exclusion threshold and the required usage percentage for a given piece of equipment depend on your specific situation, and should be confirmed with your advisor before making any decisions. These changes are real, but how they apply always depends on each company's specific situation

tax status, taxable capital, and expense structure.


This is exactly the kind of assessment we do at NoviaFond: identifying what you're entitled to before you fill out a single form.


Verified sources (September 2026)

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