The federal government tabled the 2026 Spring Economic Update on April 28, 2026, under Finance Minister François-Philippe Champagne. Titled “Canada Strong for All,” the update is primarily focused on infrastructure, trade diversification, and national sovereignty, but it also confirms key innovation incentives, including the SR&ED enhancements announced in Budget 2025. For Canadian tech companies, now is the time to understand what’s in motion, and how to take full advantage.
The Big Picture: What the 2026 Update Is About
The Spring Economic Update is not a full budget; it’s a fiscal progress report that reaffirms strategic priorities and announces incremental new measures. The overarching theme of the Carney government’s first update is economic sovereignty and resilience: Reducing reliance on U.S. trade, building national infrastructure, attracting global investment, and positioning Canada for long-term competitiveness.
The update projects that Canada is on track for the second-fastest G7 growth in 2026 (per IMF projections), while introducing a $25 billion sovereign wealth fund (the Canada Strong Fund) to invest in strategic Canadian companies and projects alongside private capital.
For tech and innovation-focused companies, the most directly relevant signals are around the SR&ED tax incentive enhancements (carried forward from Budget 2025) and a broader government posture favoring Canadian productivity, competitiveness, and innovation investment.
SR&ED Enhancements: What’s Confirmed
The Spring Economic Update reaffirms the SR&ED enhancements announced in Budget 2025 as part of Canada’s economic transformation agenda. These changes are expected to generate an estimated $1.2 billion per year in economic output, offering a meaningful signal that the government views the SR&ED program as a critical productivity lever, not just a tax line item.
What the 2026 SR&ED Enhancements Include
Budget 2025 introduced the most significant SR&ED reforms in over a decade. These changes are now being implemented:
- Doubled expenditure limit for the enhanced 35% refundable ITC: Bill C-15 doubles the annual expenditure limit eligible for the 35% refundable ITC from $3 million to $6 million. This means CCPCs can now earn up to $2.1 million in refundable credits (up from $1.05 million) before remaining expenditures fall to the 15% non-refundable rate. The rate itself stays at 35%—but the doubling of the eligible limit is the largest single expansion of this benefit in decades.
- Expanded taxable capital phase-out thresholds: The taxable capital thresholds at which the enhanced refundable credit phases out have been widened from $10M–$50M to $15M–$75M. This means growing companies retain access to the full enhanced credit further into their growth journey. CCPCs can also now elect to use a gross revenue-based phase-out calculation instead of the taxable capital measure—a more flexible option for many modern companies.
- Restored capital expenditure eligibility: Capital expenditures are once again eligible SR&ED costs under Bill C-15, reversing the 2014 exclusion. This applies to eligible property acquired and available for use on or after December 16, 2024—meaning hardware, lab equipment, and eligible manufacturing assets supporting R&D work can now be included in your claim.
- Enhanced credit extended to eligible Canadian public corporations (ECPCs): Previously, only CCPCs could access the enhanced 35% refundable credit. Bill C-15 extends eligibility to eligible Canadian public corporations (ECPCs), broadening access to this incentive for a wider range of Canadian innovation companies.
These enhancements are significant for any Canadian business investing in product development, software, hardware, cleantech, AI, biotech, or manufacturing process improvement. If your company hasn’t reviewed your SR&ED eligibility in light of these changes, it’s worth doing now—these aren’t minor tweaks.
All SR&ED figures above are sourced from Bill C-15 (Budget 2025 Implementation Act, No. 1), which received Royal Assent on March 26, 2026. Effective date for most changes: Tax years beginning on or after December 16, 2024.
The Productivity Super-Deduction: A New Capital Investment Signal
Alongside SR&ED, the Spring Update highlights the Productivity Super-Deduction as a parallel incentive for Canadian business investment. This measure allows accelerated depreciation for eligible new investments in machinery, equipment, and technology, and is projected to generate up to $9 billion annually in economic output over the next decade.
For R&D-intensive companies, this compounds the value of the SR&ED program: SR&ED credits offset the cost of qualifying research expenditures, while the Productivity Super-Deduction can accelerate write-offs on new capital assets supporting that work.
The Canada Strong Fund: What It Means for Innovation
One of the marquee announcements in the Spring Update is the Canada Strong Fund, which is Canada’s first sovereign wealth fund, seeded with $25 billion over three years. The fund is designed to invest in strategic Canadian projects and companies alongside private capital, with a focus on infrastructure, energy, manufacturing, and advanced industries.
While the fund is not specifically an innovation or tech fund, it signals a federal government willing to take direct equity positions in Canadian companies and sectors it views as strategically important. This is a meaningful shift in tone for Canadian innovation policy.
The update also confirms a September 2026 Investment Summit to attract global capital into Canada—another signal of the government’s intent to position Canada as a premier destination for high-value investment.
What Canada’s Innovation Community Is Saying
The Council of Canadian Innovators (CCI)—a member-based organization representing growth-stage tech companies—responded to the update with measured skepticism. CCI CEO Patrick Searle noted that while the update
“signposts forthcoming strategies and policies that may remove barriers to scale,” the statement ultimately “came up short” in addressing the needs of digitally minded and innovative firms that are driving Canada’s productivity growth.
Searle also pointed to a research finding that Canadian startups are increasingly choosing to launch outside Canada, and called for policies that better reflect 21st-century economics, including the $100 trillion global value of intangible assets, which make up 92% of the S&P 500.
The CCI’s position is consistent with a view shared by many in Canada’s tech sector: the SR&ED enhancements are a step in the right direction, but the broader policy ecosystem needs to do more to retain and grow high-value, knowledge-based companies domestically.
What This Means for Your Business
Whether you’re a SaaS founder, a cleantech company scaling across provinces, or a manufacturer investing in process automation, this update has practical implications:
- SR&ED remains your most immediate lever. The 2026 SR&ED Enhancements are now in effect. If you’re investing in technological innovation—software, hardware, AI, biotech, advanced manufacturing—you likely qualify. The doubled expenditure limit (now $6M) means up to $2.1M in refundable credits are available annually; recurring, non-dilutive capital that doesn’t require giving up equity.
- Documentation quality matters more than ever. The government’s broader emphasis on productivity and competitiveness comes with continued CRA scrutiny on SR&ED claims. Contemporaneous documentation (tracking your qualifying activities and expenditures in real time) remains the most important factor in a defensible claim.
- Capital expenditures are back in scope. If your company has been investing in new lab equipment, computing infrastructure, or manufacturing assets that support R&D, revisit whether those costs qualify under the restored capital expenditure rules.
- Stack your incentives. SR&ED can be combined with provincial R&D tax credits (such as Ontario’s OITC, BC’s SR&ED credit, or Quebec’s CDAE-IA), the Productivity Super-Deduction, and eligible investment tax credits. A strategic approach to stacking these programs can significantly increase total non-dilutive returns.
