QUESTION PERIOD — National Revenue
Tax Incentives
February 5, 2026
Senator Moreau, tax earned by audit, or TEBA, is a tax compliance performance metric used to assess the Canada Revenue Agency auditors. TEBA forms part of the CRA’s executive performance and compensation framework.
The CRA also administers the Scientific Research and Experimental Development tax credit program, or SR&ED. The SR&ED incentive program is designed to promote business investment in intellectual property discovery and commercialization. It’s a cornerstone of Canada’s Innovation Strategy.
The TEBA performance metric is a tax compliance indicator, whereas SR&ED is an innovation incentive program. When TEBA is applied to SR&ED, it risks prioritizing compliance recoveries over the program’s core purpose, which is incentivizing innovation.
Can the government clarify who has the authority to remove SR&ED-related adjustments from TEBA and what steps would be required to implement such a change?
You would agree with me that it’s a rather technical question that you’re asking, Senator Deacon. I have some information for you, but I will provide you with more explanation later.
The Scientific Research and Experimental Development tax incentive program, already providing $4.2 billion in annual support, is the federal government’s single most important tool to encourage business R&D.
The most recent budget proposed to further increase the enhanced rate expenditure limit to help innovative businesses scale up and grow. This additional government investment of $440 million on an ongoing basis is expected to catalyze private sector R&D investment, generating an economic output of $1.2 billion a year.
Now, I’ll have to come back to answer technically your very focused and precise question.
I agree, the SR&ED program is enormously important. That’s all the more reason to not have an incentive program for auditors that has them choose where they can best get more tax revenue from someone or not give out an incentive to someone, which means those who have lawyered up have the best chance of getting whatever benefit they want to receive. Those who are not able to do that are in an inequitable position. I think it needs to be looked at.
I understand it is a very complicated question where you don’t have to have two programs that are counterbalancing each other. I’ll ask the question and bring back a follow-up.
