Provincial and territorial research and development (R&D) tax credits - Scientific Research and Experimental Development (SR&ED) tax incentives

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Scientific Research and Experimental Development (SR&ED) tax incentives

Provincial and territorial research and development (R&D) tax credits

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The following province and territories do not offer a tax credit for R&D:

  • Northwest Territories
  • Nunavut
  • PEI

Alberta

Innovation Employment Grant

The Innovation Employment Grant (IEG) program is administered by the province and provides a refundable tax credit to qualified corporations that incur eligible expenditures in respect of research and development (R&D) activities carried out in Alberta.

The IEG encourages economic growth by supporting small and medium-sized businesses that invest in R&D with a grant worth up to 20% of qualifying expenditures.

The grant provides qualified corporations with:

  • an 8% payment for eligible R&D spending carried out in Alberta, up to the corporation's base level of spending
  • an enhanced 20% payment for eligible R&D spending that exceeds the corporation's base spending level

A firm's base level of spending is determined by calculating the corporation's average qualifying R&D spending over the previous 2 years.

The grant provides benefits on up to $4 million in annual R&D spending.

Available to:
Qualified corporations that incur eligible expenditures in respect of R&D activities carried out in Alberta.

Base:
Eligible expenditures.

Eligible work and expenditures:
Eligible expenditures must have been incurred in Alberta after December 31, 2020 and match those that qualify for the federal Scientific Research and Experimental Development (SR&ED) Tax Incentive Program.

Filing deadline for claiming the credit:
15 months after the corporation's filing due date.

Carryback / carryforward:
Not applicable.

Assistance:
Eligible expenditures are reduced by government and non-government assistance except for the Alberta SR&ED tax credit and the federal SR&ED investment tax credit. The Alberta SR&ED tax credit will reduce the federal pool of deductible SR&ED expenditures and federal qualified SR&ED expenditures.

Recapture:
A recapture will create or increase Alberta tax otherwise payable.

Ability to renounce:
Not applicable.

Forms:

Guide:
Guide to claiming the Alberta Innovation Employment Grant

Information Circular:
Information Circular IEG-1, Alberta Corporate Income Tax

Legislation:
Sections 26.95 to 26.99 of the Alberta Corporate Tax Act (PDF, 1.63MB)

Provincial website:
Innovation Employment Grant | Alberta.ca

British Columbia

Scientific research and experimental development (SR&ED) tax credit

The British Columbia SR&ED tax credit is administered by the Canada Revenue Agency and is refundable for Canadian-controlled private corporation (CCPCs) up to 10% of the expenditure limit (that is, $3 million x 10% = $300,000) and non-refundable otherwise at a rate of 10% of SR&ED qualified British Columbia expenditures.

Available to:
Corporations and corporations that are members of partnerships (other than specified members) with a permanent establishment in British Columbia, for SR&ED carried out in this province.

Base:
British Columbia qualified expenditures by a qualified corporation.

Eligible work and expenditures:
British Columbia rules parallel the federal SR&ED rules relating to the definition of SR&ED, qualifying expenditures, and the expenditure limit.

The tax credit is refundable for CCPCs at the rate of 10% of the corporation's SR&ED British Columbia qualified expenditures for the tax year.

The British Columbia SR&ED tax credit has been extended to allow corporations that are members of partnerships to claim their proportionate share of the partnership's SR&ED carried on in British Columbia, for qualified expenditures after February 20, 2007.

Filing deadline for claiming the credit:
18 months after the corporation's tax year-end.

Carryback / carryforward:
Non-refundable tax credits can be carried back 3 years and carried forward 10 years to reduce British Columbia income taxes payable.

Assistance:
Provincial qualified expenditures are reduced by government and non-government assistance, but not the British Columbia SR&ED tax credit. The British Columbia Scientific research and experimental development tax credit will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
A recapture will create or increase British Columbia tax otherwise payable.

Ability to renounce:
Applies to non-refundable tax credits only.

Form:
T666, British Columbia Scientific Research and Experimental Tax Credit

Legislation:
Sections 97 to 103 of the Income Tax Act (British Columbia)

Provincial website:
British Columbia – Research and Development Tax Credit

Manitoba

Research and development (R&D) tax credit

The Manitoba R&D tax credit is administered by the Canada Revenue Agency.

The amount of the credit is equal to 15% on eligible expenditures made after April 11, 2017. The rate was previously 20%.

One half of the tax credit on eligible expenditures for in-house R&D is refundable. Therefore, after April 11, 2017, 7.5% is refundable, the rest is non-refundable.

Except, the tax credit on eligible expenditures, where the R&D is carried on in Manitoba under R&D contract with a qualifying institute, is fully refundable.

See the List of potentially eligible institutions (PDF, 15KB).

A corporation may claim any repayments of government assistance that previously reduced the allowable scientific research and experimental development (SR&ED) expenditure pool.

Available to:
Corporations, including corporations that are beneficiaries of a trust and corporations that are members of a partnership with a permanent establishment in Manitoba, for SR&ED carried out in this province.

Base:
Eligible expenditures.

Effective January 1, 2014, the definition of "eligible expenditure" has been amended so as:

  • to follow the federal reduction in the prescribed proxy amount
  • not to follow the federal change to SR&ED provisions disallowing capital expenditures
  • to follow the federal reduction to 80% of the claimable portion of contract payments with the exception of contract payments to eligible educational institutions in Manitoba which remain fully eligible

Eligible work and expenditures:
Those that qualify for the federal SR&ED investment tax credit.

Filing deadline for claiming the credit:
1 year after the filing due date.

Carryback / carryforward:
For the non-refundable tax credits, the carry­back period is 3 years and the carry­forward period is 20 years for tax years ended after 2005.

The carry-forward period for the non-refundable tax credit was 10 years for tax years ended after 2003 and 7 years for tax years ended before 2004.

Those carrybacks/carryforwards are applied against the Manitoba income taxes payable.

Assistance:
Eligible expenditures are reduced by government and non-government assistance.
The Manitoba R&D tax credit will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
Not applicable.

Ability to renounce:
A corporation can renounce its entitlement to all or part of the Manitoba R&D tax credit that is attributable to eligible expenditures incurred in a tax year up to one year after its filing due date for the tax year. However, for federal purposes, the Manitoba R&D tax credit must be renounced on or before six months after the corporation's tax year-end.

Form:
T2SCH380, Manitoba Research and Development Tax Credit

Legislation:
Section 7.3 of the Income Tax Act (Manitoba)

Provincial website:
Manitoba – Research and Development Tax Credit

New Brunswick

Research and development (R&D) tax credit

The New Brunswick R&D tax credit is administered by the Canada Revenue Agency and is fully refundable at the rate of 15% on eligible expenditures incurred after December 31, 2002.

Available to:
Corporations, corporations that are beneficiaries of a trust, and corporations that are members of a partnership, with a permanent establishment in New Brunswick, for scientific research and experimental development (SR&ED) carried out in this province.

Base:
Eligible expenditures.

Eligible work and expenditures:
Those that qualify for federal SR&ED investment tax credit.

Filing deadline for claiming the credit:
Not applicable.

Carryback / carryforward:
Non-refundable tax credits can be carried back 3 years and forward 7 years.

Assistance:
Eligible expenditures are reduced by government and non-government assistance, but not the New Brunswick R&D tax credit. The New Brunswick R&D tax credit will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
A recapture will create or increase New Brunswick tax otherwise payable.

Ability to renounce:
Not applicable.

Form:
T2SCH360, New Brunswick Research and Development Tax Credit

Legislation:
Section 59 of the New Brunswick Income Tax Act

Provincial website:
New Brunswick – Research and Development Tax Credit

Newfoundland and Labrador

Research and development (R&D) tax credit

The Newfoundland and Labrador R&D tax credit is administered by the Canada Revenue Agency and is fully refundable at the rate of 15% of eligible expenditures.

Available to:
Taxpayers, including corporations and individuals, beneficiaries of a trust, and members of a partnership, with a permanent establishment in Newfoundland and Labrador, for scientific research and experimental development (SR&ED) carried out in this province.

Base:
Eligible expenditures.

Eligible work and expenditures:
Those that qualify for federal SR&ED investment tax credit.

Filing deadline for claiming the credit:
12 months after the filing due date.

Carryback / carryforward:
Not applicable.

Assistance:
Eligible expenditures are not reduced by government and non-government assistance, including the Newfoundland and Labrador R&D tax credit, except with respect to harmonized sales tax (HST) and goods and services tax (GST) input tax credits. The Newfoundland and Labrador R&D tax credit will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
Not applicable.

Ability to renounce:
Not applicable.

Forms:

Legislation:
Section 42 of the Income Tax Act (Newfoundland and Labrador)

Provincial website:
Newfoundland and Labrador – Research and Development Tax Credit

Nova Scotia

Research and development (R&D) tax credit

The Nova Scotia R&D tax credit is administered by the Canada Revenue Agency and is fully refundable at the rate of 15% of eligible expenditures.

Available to:
Corporations, corporations that are beneficiaries of a trust, and corporations that are members of a partnership, with a permanent establishment in Nova Scotia, for scientific research carried out in this province.

Base:
Eligible expenditures.

Eligible work and expenditures:
Those that qualify for federal scientific research and experimental development (SR&ED) investment tax credit.

Filing deadline for claiming the credit:
18 months after the corporation's tax year-end.

Carryback / carryforward:
Not applicable.

Assistance:
Eligible expenditures are reduced by government and non-government assistance, but not the Nova Scotia R&D tax credit. The Nova Scotia R&D tax credit will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
A recapture will create or increase Nova Scotia tax otherwise payable.

Ability to renounce:
On or before six months after the corporation's tax year-end.

Form:
T2SCH340, Nova Scotia Research and Development Tax Credit

Legislation:
Section 41 of the Income Tax Act (Nova Scotia) (PDF, 509 KB)

Provincial website:
Nova Scotia – Research and Development Tax Credit

Ontario

Ontario innovation tax credit (OITC)

The OITC is administered by the Canada Revenue Agency after December 31, 2008.

This tax credit is refundable at one of the following rates:

  • 10% for tax years that end before June 1, 2016
  • 8% for tax years that start after May 31, 2016
  • Prorated for a tax year that includes May 31, 2016

The refundable tax credit rate is applied to the lesser of the corporation’s qualified expenditures incurred in Ontario and its annual expenditure limit.

The annual expenditure limit of $3 million of qualified expenditures is phased out when the corporation's taxable paid-up capital for its preceding tax year exceeds $25 million and, it is eliminated when it reaches $50 million. The expenditure limit is also phased out when the corporation's taxable income for its preceding tax year is over $500,000 but does not exceed $800,000.

Available to:
All corporations with a permanent establishment in Ontario, for scientific research and experimental development (SR&ED) carried out in this province.

Base:
Qualified expenditures.

Eligible work and expenditures:
Only expenditures for SR&ED carried on in Ontario, for which the taxpayer is eligible for the federal SR&ED investment tax credit (ITC), qualify for the OITC.

Ontario rules draw on the federal SR&ED rules relating to the definition of SR&ED, qualified expenditures, the expenditure limit, and its reduction based on prior-year taxable income. Prescribed Schedule T2SCH31, Investment Tax Credit – Corporations (2017 and later tax years), must be filed to claim the OITC.

Filing deadline for claiming the credit:
Not applicable.

Carryback / carryforward:
Not applicable. Any OITC in excess of tax otherwise payable will be refunded.

Assistance:
Qualified expenditures are reduced by government and non-government assistance, but not the OITC, Ontario business-research institute tax credit (OBRITC), Ontario research and development tax credit (ORDTC), or the federal SR&ED ITC. The OITC will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
Not applicable.

Waiver of tax credit:
A corporation can waive the tax credit, or a portion of the tax credit, by delivering a written waiver with its return, which is required to be filed on or before six months after the corporation's tax year-end, or on an amended return for that year.

Forms:

Legislation:

Ontario business-research institute tax credit (OBRITC)

The OBRITC is administered by the Canada Revenue Agency after December 31, 2008, and is fully refundable at the rate of 20% of qualified expenditures.

There is a $20 million annual cap. The cap must be allocated within an associated group of corporations.

Available to:
Corporations and corporations that are members of partnerships (other than specified members) with a permanent establishment in the province of Ontario in respect of qualified expenditures on SR&ED incurred under eligible contracts with eligible research institutes (ERIs).

A list of ERIs is available on the Ontario Business-Research Institute Tax Credit website.

A qualifying corporation or partnership of which it is a member that is claiming the OBRITC is no longer required to apply to the Ontario minister of revenue for an advanced ruling, with respect to eligible contracts entered into after August 9, 2007. When a corporation or a partnership of which it is a member has entered into a contract on or before August 9, 2007, it may be eligible for an administrative concession with respect to the ruling requirement.

Base:
Qualified expenditures.

Eligible work and expenditures:
Ontario rules mirror federal SR&ED rules regarding the definition of SR&ED and qualified expenditures other than an expenditure that may reasonably be considered to fund the payment of salary or wages to an employee of the eligible research institute who is connected to the corporation making the expenditure or a prescribed type expenditure.

Ontario law does not require prescribed Schedule T2SCH31, Investment Tax Credit – Corporations, to be filed to claim the OBRITC.

Filing deadline for claiming the credit:
Not applicable.

Carryback / carryforward:
Not applicable.
Any OBRITC in excess of tax otherwise payable will be refunded.

Assistance:
Qualified expenditures are reduced by government and non-government assistance, but not the OBRITC, OITC, ORDTC, or the federal SR&ED ITC. The OBRITC will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
Not applicable.

Ability to renounce:
Not applicable.

Forms:

2009 and later tax years

Legislation:

Ontario research and development tax credit (ORDTC)

The ORDTC is administered by the Canada Revenue Agency after December 31, 2008.

It is a non-refundable tax credit based on eligible expenditures incurred by a corporation in a tax year.

The ORDTC rate is:

  • 4.5% for tax years that end before June 1, 2016
  • 3.5% for tax years that start after May 31, 2016
  • prorated for a tax year that ends on or after June 1, 2016, and includes May 31, 2016

Available to:
Corporations with a permanent establishment in Ontario, for SR&ED carried out in this province.

Base:
Eligible expenditures.

Eligible work and expenditures:
Those that qualify for federal SR&ED investment tax credit. Prescribed Schedule T2SCH31, Investment Tax Credit – Corporations, must be filed to claim the ORDTC.

Filing deadline for claiming the credit:
Not applicable.

Carryback / carryforward:
Carry back 3 years to reduce Ontario corporate income tax payable, but not to a tax year that ends before January 1, 2009.
Carry forward 20 years.

Assistance:
Eligible expenditures are reduced by government and non-government assistance, but not the ORDTC or the federal SR&ED ITC. The ORDTC will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
Any recapture will create or increase Ontario tax otherwise payable.

Waiver of tax credit:
A corporation can waive the tax credit, or a portion of the tax credit, by delivering a written waiver with its return, which is required to be filed on or before six months after the corporation's tax year-end, or on an amended return for that year.

Form:
T2SCH508, Ontario Research and Development Tax Credit

Legislation:
Sections 38 to 45 of the Taxation Act, 2007 (Ontario)

Ontario transitional tax debits and credits

The Ontario transitional tax debits and credits are administered by the Canada Revenue Agency after December 31, 2008.

Corporations may be subject to an Ontario transitional tax debit or be eligible to claim an Ontario transitional tax credit due to the harmonization of the two legislative acts governing federal and Ontario income taxes.

Available to:
Specified corporations that are subject to Ontario transitional tax debit or claiming the Ontario transitional tax credit. The definition of specified corporations is available on Schedule T2SCH506, Ontario Transitional Tax Debits and Credits.

Filing deadline for claiming the credit:
Schedule T2SCH506, Ontario Transitional Tax Debits and Credits, must be filed with the claimant's T2 Corporation Income Tax Return. Schedule T2SCH507, Ontario Transitional Tax Debits and Credits Calculation, is a worksheet and is not required to be filed with the claimant's income tax return.

For Ontario and federal corporate income tax purposes, taxpayers typically have tax pools with respect to amounts that can be carried over to another tax year—for example the pool for unclaimed SR&ED expenditures. Currently, tax pool balances may be different for federal and Ontario purposes. However, upon harmonizing with the federal definition of taxable income, each Ontario tax pool balance will assume its federal value (the amount in the federal pool). In many cases, this will require upward and downward adjustment to the Ontario pools, which may result in future Ontario tax gains or losses for corporations. SR&ED performers may elect to defer the effects of the transitional tax debit related to unclaimed SR&ED expenditures.

Forms:

Legislation:
Sections 46 to 53 of the Taxation Act, 2007 (Ontario)

Information Bulletin 4011:
Explanatory Notes on Calculation of Transitional Tax Debits and Credits for Ontario Corporations

Quebec

For information with respect to Quebec's R&D tax credits, please visit the provincial website at Scientific Research and Experimental Development – Quebec.

Saskatchewan

Research and development (R&D) tax credit

The Saskatchewan R&D tax credit is administered by the Canada Revenue Agency.

Since April 1, 2017, the eligibleR&D expenditures of Canadian-controlled private corporations (CCPC), except for tax exempt corporations, qualify for a 10% refundable R&D tax credit subject to an annual limit of $1 million in eligible expenditures and to a 10% non-refundable R&D tax credit for the portion of eligible expenditures in excess of the $1 million annual limit.

For the other corporations, the Saskatchewan R&D tax credit remains a non-refundable tax credit at the rate of 10% on eligible expenditures incurred after March 31, 2015.

Before April 1, 2015, and after March 31, 2012, the Saskatchewan tax credit was refundable for CCPCs subject to a $3 million expenditure limit and non-refundable in all other situations at the rate of 15% on eligible expenditures. Before April 1, 2012, and after March 31, 2009, the Saskatchewan tax credit was refundable at the rate of 15% on eligible expenditures.

Available to:
Corporations, including corporations that are beneficiaries of a trust and corporations that are members of a partnership, with a permanent establishment in Saskatchewan, for scientific research and experimental development (SR&ED) carried out in the province.

Base:
Eligible expenditures.

Eligible work and expenditures:
Those that qualify for the federal SR&ED investment tax credit.

Filing deadline for claiming the credit:
Not applicable.

Carryback / carryforward:
Non-refundable tax credits can be carried back 3 years and forward 10 years and applied against Saskatchewan income taxes payable.

Assistance:
Eligible expenditures are reduced by government and non-government assistance, but not by the Saskatchewan R&D tax credit. The Saskatchewan R&D tax credit will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
Not applicable.

Ability to renounce:
A corporation may renounce its entitlement to all or part of the Saskatchewan R&D tax credit on its eligible expenditures incurred during the year. Non-refundable tax credits can be renounced on or before the date by which the R&D tax credit would otherwise reduce any deduction of the corporation because of federal paragraph 37(1)(d) or reduce the corporation's qualified expenditures under any of subsections 127(18) to (20).

Form:
T2SCH403, Saskatchewan Research and Development Tax Credit

Legislation:
Sections from 63 to 63.4 of The Income Tax Act (Saskatchewan) (PDF, 541KB)

Provincial website:
Saskatchewan – Research and Development Tax Credit

Yukon

Research and development (R&D) tax credit

The Yukon R&D tax credit is administered by the Canada Revenue Agency and is refundable at the rate of 15% of eligible expenditures. An additional 5% is available on amounts paid or payable to the Yukon University.

Available to:
Corporations with a permanent establishment in the Yukon at any time in the year, individuals who are resident in the Yukon on the last day of the year, including beneficiaries of a trust, and members of a partnership, for scientific research and experimental development (SR&ED) carried out in the Yukon.

Base:
Eligible expenditures.

Eligible work and expenditures:
Those that qualify for federal SR&ED investment tax credit.

Filing deadline for claiming the credit:
12 months after the filing due date.

Carryback / carryforward:
Not applicable.

Assistance:
Eligible expenditures are reduced by government and non-government assistance, but not the Yukon R&D tax credit. The Yukon R&D tax credit will reduce the federal pool of deductible SR&ED expenditures and qualified SR&ED expenditures.

Recapture:
Not applicable.

Ability to renounce:
Not applicable.

Forms:

Legislation:
Section 15 of the Income Tax Act (Yukon)

Territorial website:
Yukon – Research and Development Tax Credit


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Date modified:
2024-01-23