Provincial SR&ED Tax Credits
The federal government isn’t the only one that is encouraging companies to do scientific research and experimental development in Canada. In fact, most provinces and territories have their own incentives for research and development. Learn about digital media provincial incentives.
Provincial and federal SR&ED tax credits work together. The provincial tax credit is calculated first, and the federal ITC is calculated on the remainder of the claim. For example, if you are a qualified CCPC based in Alberta, then you can be eligible to receive a 10% refundable tax credit from the provincial government and a 35% refundable tax credit (on the remainder) from the federal government. This brings the full value that your company could be receiving to 41.5%.
Below, we’ve outlined what your local provincial government offers as far as tax credits go. Keep in mind that companies are only eligible for tax credits from provinces where they are based in and where they pay taxes. Also, be sure to take a look at some common SR&ED myths and SR&ED FAQ as well.
Companies in Alberta with a year end after December 31, 2008 are eligible for a 10% refundable tax credit.
In British Columbia, companies involved in research and development are eligible for a 10% tax credit. If the company is a CCPC, then the tax credit is refundable, whereas if the company is not a CCPC, the tax credit is non-refundable.
Companies that do their R&D work in Manitoba are entitled to a 20% partially-refundable tax credit. The tax credit can be carried forward 10 years, or back 3 years.
Companies that are based in and do their R&D in New Brunswick are qualified for a 15% refundable tax credit.
Newfoundland and Labrador
In Newfoundland and Labrador, companies involved in SR&ED are eligible for a 15% refundable tax credit.
There is not currently a provincial program for the Northwest Territories. However, companies in these territories may still receive the federal credit.
Companies in Nova Scotia are eligible for a 15% refundable tax credit on SR&ED work that is done in the province.
There is not currently a provincial program Nunavut. However, companies in this territory may still receive the federal credit.
If your business is performing SRED in Ontario, you are eligible for the 10% Ontario Innovation Tax Credit and the non-refundable 4.5% Ontario Research and Development Tax Credit.
Prince Edward Island
There is not currently a provincial program for Prince Edward Island. However, companies in this province may still receive the federal credit.
Quebec companies are eligible for credits of 14% – 30% on their SR&ED work. If the CCPC has assets that amount to less than $50 million for the previous tax year, they may be eligible for 30% of expenditures over $50,000. If their assets are more than $75 million, they may be eligible for 14% (the exclusion threshold of $50,000 will increase accordingly). Between $50 million and $75 million, the rate varies accordingly.
Companies performing research and development in Saskatchewan are eligible for a 15% non-refundable tax credit. The tax credit can be carried forward 10 years, or back 3 years.
Companies based in the Yukon Territory are eligible to receive a 15% refundable tax credit on all R&D work that is done in that territory.
For more information as to how you can claim SRED tax credits both provincially and federally, contact NorthBridge Consultants.