For Canadian SMEs, funding innovation and funding it’s protection (intellectual property) can be two different challenges. Government programs may help finance R&D or develop or support an IP strategy, but building and maintaining an international IP portfolio remains a significant investment.
Budget 2026 proposes additional support through an expansion of the Scientific Research and Experimental Development (SR&ED) tax incentive program. Certain commercialization expenses, including securing and maintaining IP protection, would become eligible for SR&ED. The government estimates that the broader expansion would provide approximately $930 million of support over five years and $235 million annually thereafter.
Under the proposal, eligible IP expenses would include reasonable costs associated with preparing and filing applications and maintaining IP rights relating to IP developed through an otherwise eligible SR&ED project.
Eligible rights would include patents, certificates of supplementary protection, plant breeders' rights and copyrighted software, including equivalent protection obtained in foreign jurisdictions. Enforcement and litigation costs would not qualify.
An important limitation to note for companies pursuing foreign patents: while fees paid to foreign IP offices may qualify, supporting work, such as preparing an application, would generally qualify only when that work is performed in Canada.
The important point for SMEs is that the new SR&ED measure should not be viewed as replacing Canada's existing IP programs, but would sit alongside them:
Together, these measures could help businesses access support at several points along a traditional IP roadmap, from R&D → IP strategy → IP protection → commercialization.
This does require some coordination as programs can support overlapping activities. Companies will need to pay close attention to program rules regarding eligible expenses and other government assistance. An IP advisor and/or tax advisor can help businesses understand how those pieces fit their specific circumstances.
The budget also signals a broader shift in federal IP policy. Among other measures, the government proposes to:
This announcement is a useful reason to bring IP planning and R&D tax planning into the same conversations.
When starting an SR&ED-eligible development project, identify the IP being created, decide what should be patented, kept as a trade secret or otherwise protected, and track the associated IP expenditures. Reviewing those questions with your technical team, finance team and advisors can help identify potential support and gaps in the information needed to assess eligibility and help determine whether programs such as ElevateIP or IP Assist can complement the SR&ED support.
From Stratford’s perspective, the opportunity is to make well-planned protection more affordable. Funding should inform the budget, while business priorities guide what deserves protection and where.
For a technology SME spending heavily on R&D and building patents in Canada and internationally, a coordinated approach of looking at protection costs alongside target markets, competitive risks, and growth plans could materially reduce the effective cost of moving an innovation from the lab to a protected, commercial asset.
Overall, Budget 2026 signals that Canada is beginning to connect R&D support, IP protection and commercialization more deliberately. For SMEs, we recommend using this as an opportunity to make sure your IP strategy connects those dots too.
Stratford helps businesses develop IP strategies and manage protection decisions that support their commercial goals. If you’re reviewing your IP plans and budget, let’s talk.
*This update summarizes Budget 2026 proposals and provides general information. Eligibility and tax treatment should be reviewed with your tax advisor.