Canada’s 2024 SR&ED Reform: What Healthcare and Life Sciences Businesses Need to Know

In December 2024, the Government of Canada announced sweeping changes to its Scientific Research and Experimental Development (SR&ED) tax incentive program — the country’s most important financial tool for R&D support.

These changes aim to make innovation funding more accessible, more generous, and better aligned with the needs of growing industries — especially in healthcare and life sciences.

What Is the SR&ED Program?

The SR&ED program provides tax credits for Canadian businesses conducting eligible R&D activities. It allows companies to recover a percentage of expenditures like wages, materials, overhead, and now — under the new rules — even capital assets.

This is a crucial source of non-dilutive funding for innovators developing medical technology, improving diagnostic tools, or advancing pharmaceuticals.

Key Changes in 2024

As of December 16, 2024, the following reforms apply to taxation years beginning on or after this date:

Increased Expenditure Limit

The maximum annual expenditure eligible for the enhanced 35% refundable credit has increased from $3 million to $4.5 million.
📌 More capital to fund deeper innovation.

Broader Access for CCPCs

The taxable capital phase-out threshold has expanded:

• Was: $10M to $50M

• Now: $15M to $75M

📌 More Canadian-controlled private corporations (CCPCs) now qualify for enhanced credits.

Public Companies Now Included

Eligible Canadian public corporations can now access the enhanced 35% refundable credit — previously reserved only for private companies.

📌 Large-scale R&D initiatives in healthcare can now benefit, including hospitals, research institutes, and listed life sciences firms.

Capital Expenditures Restored

One of the most impactful changes: capital assets are once again eligible for both tax deductions and investment tax credits under SR&ED.
📌 Major win for capital-intensive sectors like medical devices and manufacturing.

Source: Government of Canada – SR&ED Reform Announcement

Why This Matters for Healthcare and Life Sciences

R&D is central to innovation in healthcare. From developing new therapies and biotech platforms to upgrading diagnostic equipment or lab software — access to funding determines how fast ideas become results.

These new rules make it significantly easier to:

• Fund multi-year R&D roadmaps

• Claim refunds for capital equipment like lab gear and testing tools

• Build financial runway without issuing equity

In short: more cash, less dilution, and higher returns on innovation.

✅ Real-World Example

A medical device manufacturer developing a new Class II wearable needed to invest in both software engineering and a custom sensor prototyping lab.

Under the updated SR&ED rules:

• Engineering salaries and materials are eligible

• Equipment purchases for the lab setup now qualify

• The company can receive a refundable credit on up to $4.5M in annual R&D costs

This change unlocked an additional $500K+ in refundable credits, which was reinvested into clinical validation.

How to Maximize Your SR&ED Claim

Here’s how Finmed Capital supports businesses like yours:

🔎 Assess Eligibility
We help you identify which activities and expenses qualify — even those not obviously R&D.

📋 Support Documentation
We guide your team in tracking and presenting the right information for CRA compliance.

💡 Strategic Financing
We combine SR&ED credits with financing options like asset-based lending or sale-leaseback to maximize your funding potential.

📌 Final Thoughts

The 2024 SR&ED reform is a game-changer for innovative businesses. Whether you’re developing next-gen medical devices, scaling biotech production, or automating your lab — you now have access to more support, more often, and with fewer restrictions.

At Finmed Capital, we help you turn tax credits into real capital — and use that capital to grow.

📞 Ready to explore your eligibility or plan your 2025 R&D funding strategy?
Contact us at finance@finmedcapital.ca or visit www.finmedcapital.ca