For innovative companies operating on both sides of the 49th parallel, a major opportunity is often overlooked. While most businesses know about the U.S. R&D Tax Credit or Canada's Scientific Research and Experimental Development (SR&ED) program, few realize you can potentially claim both—turning your cross-border innovation into a powerful engine for non-dilutive funding. 

But as always, there’s a catch: Navigating both programs at once can feel like solving a Rubik’s cube blindfolded. The process is complex, the stakes are high, and a single misstep could mean leaving hundreds of thousands of dollars on the table—or even triggering costly audits in both countries. 

The Cross-Border Conundrum: Why Most Companies Miss the Mark

Picture your development team in Toronto working seamlessly with your engineers in San Francisco to build the next big breakthrough in AI. Innovation is happening everywhere, expenses are incurred in both countries—yet most companies only claim credits in one. Why? Because claiming R&D tax credits in both the U.S. and Canada isn’t just complicated—it’s a regulatory maze that most businesses simply don’t have the resources to navigate. 

The challenges are real and varied:

Different Definitional Frameworks: What counts as eligible R&D activity varies widely between countries. In the U.S., the focus is on the “four-part test”: technological uncertainty, a process of experimentation, technological in nature, and a useful purpose. In contrast, Canada’s SR&ED program emphasizes systematic investigation through experiments or analysis to resolve scientific or technological uncertainty.

Complex Expense Allocation: You need to carefully document and allocate expenses between jurisdictions, making sure you don’t double-claim the same costs—while still maximizing your legitimate opportunities in both countries. 

Varying Documentation Standards: The IRS expects different supporting documentation than the Canada Revenue Agency (CRA), and the level of detail required for project descriptions, technical uncertainty explanations, and expense tracking varies considerably.

Timing and Filing Differences: U.S. R&D credits are claimed annually with tax returns, while in Canada, SR&ED claims must be filed within 18 months of the tax year-end. This creates coordination challenges for companies with operations on different fiscal calendars.

Recent Game-Changing Updates: A New Landscape Emerges

The landscape has shifted dramatically in recent months, making cross-border claims both more attractive and more complex:

The One Big Beautiful Bill Act: U.S. R&D Gets a Major Boost

When President Trump signed the One Big Beautiful Bill Act on July 4, 2025, it marked a turning point for U.S. R&D tax policy. The law restored immediate expensing for domestic R&D costs, ending the burdensome five-year amortization rule that had been stifling innovation investments since 2022. 

Key changes include:

  • Retroactive Relief: Small Business Taxpayers (those with average annual gross receipts of $31 million or less) can file amended returns to immediately deduct 2022-2024 capitalized R&D costs and claim refunds
  • Permanent Expensing: Domestic R&D expenses can now be fully deducted in the year incurred, rather than amortized over five years
  • Enhanced Credits: The legislation includes provisions for broader R&D credit eligibility and improved cash flow for qualifying businesses

Canada’s SR&ED Program: Major Changes on the Horizon 

Canada isn’t standing still. The draft SR&ED legislation released in August 2025 is being called “the most significant update to the SR&ED program in over a decade.” Proposed changes include raising the annual expenditure limit for the enhanced 35% investment tax credit for Canadian-Controlled Private Corporations (CCPCs) from $3 million to $4.5 million. 

The proposed enhancements include:

  • Higher Credit Limits: The expenditure limit increase would allow qualifying CCPCs to claim up to $1.575 million per year of enhanced, fully refundable investment tax credit, which is $525,000 more than under the current regime
  • Expanded Eligibility: New provisions to expand SR&ED eligibility to certain public companies starting with taxation years beginning on or after December 16, 2024
  • Improved Thresholds: Proposed increases to taxable capital phase-out thresholds from $10-50 million to $15-75 million

The Audit Reality: When Compliance Becomes Critical

This is where things get serious. With both governments increasing their scrutiny, cross-border claims are more likely than ever to face audit challenges.

The audit risks multiply when claiming in both jurisdictions:

  • Coordinated Reviews: Tax authorities are increasingly sharing information and coordinating their audit activities
  • Documentation Burden: You need to maintain separate, detailed records that satisfy both IRS and CRA requirements simultaneously
  • Allocation Scrutiny: Auditors will closely examine how expenses and activities are allocated between countries
  • Technical Defense: You need experts who understand both systems and can defend claims in either jurisdiction

The Boast Advantage: Why Cross-Border Success Requires Specialized Expertise

This is exactly why partnering with a provider like Boast is essential for cross-border success. Unlike generalist tax firms who may only master one system, Boast’s platform and team are built to navigate both U.S. R&D credits and Canadian SR&ED—at the same time. 

Unified Cross-Border Intelligence

Boast’s AI-powered platform continuously identifies eligible R&D work and investments throughout your product development. This ensures that activities qualifying under both programs are properly tracked and allocated. Instead of managing two separate claims, you get a unified strategy that maximizes benefits in both countries—while staying compliant with both the IRS and CRA.

Built-in Audit Protection

Every step of Boast’s process is designed for audit confidence, thanks to our proprietary AuditShield methodology. If you’re audited, Boast provides the technical expertise and thorough documentation needed to defend your claims in both countries. 

Real-Time Compliance Monitoring

With features like real-time tracking of claims, R&D investment analysis, secure data management, and a digital audit binder, Boast offers complete transparency and control, keeping you well-informed at every step. This is particularly crucial for cross-border operations where coordination between jurisdictions is essential.

Strategic Considerations: Maximizing Your Cross-Border Advantage

For companies considering cross-border R&D credit strategies, several key factors should guide your approach:

Project Structuring: How you organize and document R&D activities can significantly impact eligibility and credit amounts in both countries. Strategic project structuring from the outset ensures maximum benefit capture.

Expense Allocation: Proper allocation methods must meet both IRS and CRA requirements, while maximizing your total credits. This demands a deep understanding of the technical rules in both systems. 

Timing Optimization: With different filing deadlines and reporting requirements, coordinating claim timing can maximize cash flow benefits and minimize administrative burden.

Future-Proofing: As both programs continue to evolve—with the U.S. rolling out OBBB changes and Canada’s draft legislation pending—having adaptable systems and expert guidance is more important than ever. 

The Bottom Line: Cross-Border Success Requires Cross-Border Expertise

Leveraging R&D tax incentives in both the U.S. and Canada is one of the most powerful sources of non-dilutive funding available to cross-border innovators. Many companies don’t realize U.S. businesses can claim up to $500,000 in R&D tax credits, and Canadian companies can recover an average of 60 cents on every dollar of qualified SR&ED expenses. 

But here’s the reality: This opportunity comes with complexity that requires specialized expertise. The regulatory frameworks are different, the documentation is extensive, and the audit risks are real. Success takes more than just knowing the rules—it takes a partner who can navigate both systems at once, ensuring maximum compliance and benefit optimization. 

With recent legislative changes creating new opportunities—and new challenges—the companies that will thrive are those who partner with providers who truly understand both sides of the border. Because with cross-border R&D tax credits, you’re not just claiming incentives—you’re building a strategic advantage that can fuel years of innovation and growth. 

Ready to unlock your cross-border R&D tax credit opportunity? The landscape has never been more favorable for companies who get it right—and the stakes have never been higher for those who don’t.