The Federal Budget 2019 proposes to change the enhanced refundable SR&ED tax credit program for Canadian Controlled Private Corporations (CCPCs) to provide a more predictable phase-out of the enhanced SR&ED credit rate. Currently, CCPCs are eligible for enhanced SR&ED tax credits at a rate of 35% on qualifying SR&ED expenditures, up to $3,000,000 (the “Expenditure Limit”). The Expenditure Limit is reduced where taxable income from the previous taxation year is between $500,000 and $800,000 and is also reduced where taxable capital employed in Canada for the previous taxation year is between $10,000,000 and $50,000,000. Budget 2019 proposes to repeal the use of taxable income as a factor, and to only rely on the CCPC’s taxable capital employed in Canada, in determining a CCPC’s Expenditure Limit. CCPC’s with taxable capital up to $10,000,000 will benefit from the full $3,000,000 Expenditure Limit, regardless of taxable income. If a CCPC has taxable capital in excess of $10,000,000, its Expenditure Limit will be gradually reduced. This measure is proposed to be applied to taxation years that end on or after Budget Day – March 19th, 2019. Budget 2019 does not propose changes to the SR&ED tax credit program for non-CCPCs.