How Canada’s SR&ED tax incentive works for AI/ML R&D, including the enhanced expenditure limit enacted in 2026 — at a high level, confirm details with a specialist.
dgm is an independent osFoundry integration partner — not affiliated with osFoundry’s maker (OS LLC), and dgm has no completed client integrations yet.
SR&ED is Canada’s largest R&D support, and AI/ML work often qualifies. In 2026 it became more generous, so it is worth understanding at a high level.
| Item | Detail |
|---|---|
| Credit | Investment tax credit on qualifying R&D |
| Rate | 35% refundable for CCPCs (up to the limit); 15% otherwise |
| 2026 change | Expenditure limit raised to $6M (Bill C-15, Royal Assent 2026-03-26) |
| Who claims it | The business, on its own tax return |
How SR&ED works
SR&ED gives an income-tax deduction plus an investment tax credit on qualifying expenditures. For Canadian-controlled private corporations (CCPCs) the enhanced credit is 35% and refundable up to an annual expenditure limit; otherwise the rate is generally 15%. AI and machine-learning projects can qualify where there is genuine technological uncertainty and systematic experimentation.
What changed in 2026
Bill C-15 received Royal Assent on March 26, 2026, enacting an increase of the enhanced-rate annual expenditure limit to $6 million (raising the maximum refundable credit), reinstating eligibility for certain capital expenditures, and raising the taxable-capital phase-out thresholds. These are significant enhancements — but eligibility is technical, so work with a CPA or SR&ED specialist and confirm details against CRA’s SR&ED policy pages.
How AI projects claim it
SR&ED is claimed by the business on its own corporate tax return (usually with a specialist), not applied for like a grant. Keep contemporaneous records of the technological uncertainty, the hypotheses tested and the work performed. Important: these are programs a business applies for directly with the government agency, bank or cluster that runs them. dgm is an independent AI-integration agency — not a registered, approved or official deliverer of any program here. dgm can help assess fit and scope an AI project, but government money does not flow through dgm.
Where dgm fits
dgm is an independent integration partner that helps Canadian businesses adopt osFoundry — scoping a first use case, handling the build, and connecting AI to the systems you already run. dgm can help you scope the AI project that a program would fund — but you apply to the program directly. dgm is independent of osFoundry’s maker (OS LLC) and has no completed client integrations yet, so everything described here is a service offered, not a past result. If you want to scope a practical first project, dgm can help you map it out.