The Scientific Research and Experimental Development (SR&ED) program is a Federal Government incentive to promote R&D in Canada. It is the largest industrial R&D incentive in the country, delivering over $3B per year in tax credits (and more recently, >$4B).
Most provinces have matching programs that layer onto the Federal one. In Alberta, depending on a company’s taxable capital and corporate structure, they may be eligible for a combined Federal and Provincial benefit of up to 48% back on their qualifying R&D costs. Alberta’s matching program is called the Innovation Employment Grant (IEG), disbursing benefits as cash-back refundable Investment Tax Credits (ITCs). These provide immediate value, regardless of whether or not a company owes taxes.
Benefits from the Federal government can be awarded as either cash-back (refundable ITCs) or non-refundable ITCs, depending on the taxpayer’s corporate structure. Federal non-refundable ITCs provide flexibility, as they can be carried forward for up to 20 years, or back for up to 3 years. More information can be found below to determine if your organization qualifies for refundable or non-refundable ITCs.

Eligible Cost Categories

 Labour

T4 salaried employees, claimed at 100% of their SR&ED-related wages.

 Contractors

Contractors engaged for performing SR&ED-related work, such as engineering, design, analysis, etc. are claimed at 80% of their cost.

 Materials

Consumed or transformed in the process of SR&ED work. Prototypes, custom products, etc. required to validate the technology.

 Overhead

Different strategies are available for capturing SR&ED overhead costs. Let TSGI determine the method that is most advantageous for your situation.

Alberta Net SR&ED Benefit (for expenditures prior to Dec 31, 2019)

“Enhanced” Canadian-Controlled Private Corporation (CCPC)

  • Privately held company
  • Not controlled by foreign ownership
  • Below $50MM taxable capital.

Non-enhanced claimant

  • Non-Canadian Controlled Private Corporation (Non-CCPC), or
  • Publicly traded company, or
  • Public company and/or one having foreign majority ownership or control, or
  • CCPCs exceeding the taxable capital limit of $50M
    • Net SR&ED benefit will decline from CCPC rate towards the Non-CCPC rate between $10 and $50M of taxable capital

"Enhanced" CCPC

+ 41.5%

For eligible costsCombined Federal + AB Provincial benefits for expenditures incurred before Dec 31, 2019

31.5% Federal portion is fully refundable (cash)
10% Provincial portion is also fully refundable (cash)
Provincial cash portion capped at $400K benefit

Non-enhanced claimant

+ 23.5%

For eligible costsCombined Federal + AB Provincial benefits for expenditures incurred before Dec 31, 2019

23.5% is non-refundable (applied against income taxes owed)
10% is fully refundable (cash)
Cash portion capped at $400K benefit

Alberta Net SR&ED Benefit (for expenditures in calendar 2020)

 Canadian-Controlled Private Corporation (CCPC)

  • Privately held company
  • Not controlled by foreign ownership (Canadian-controlled)
  • Below $50MM taxable capital

Non-CCPC (Non-Canadian Controlled Private Corporation)

  • Publicly traded company
  • Public company and/or one having foreign majority ownership or control
  • CCPCs exceeding taxable capital limits
    • Net SR&ED benefit will decline from CCPC rate towards the Non-CCPC rate between $10 and $50M taxable capital

"Enhanced" CCPC

+ 35%

For eligible costsCombined Federal + AB Provincial benefits, for expenditures incurred in calendar year 2020

35% Federal portion is fully refundable (cash)
There is no Provincial benefit in Alberta for expenditures incurred in calendar 2020.

Non-enhanced claimant

+ 15%

For eligible costsCombined Federal + AB Provincial benefits for expenditures incurred in calendar year 2020

15% is non-refundable Federal Investment Tax Credits (applied against income taxes owed)
There is no Provincial benefit in Alberta for expenditures incurred in calendar 2020.

BC Net SR&ED Benefit

CCPC

+ 41.5%*

For eligible costsCombined Federal + BC Provincial benefits

31.5% Federal portion is fully refundable (cash)
10% Provincial portion is also fully refundable (cash)
*Provincial cash portion capped at $300K benefit

Non-CCPC

+ 23.5%**

For eligible costsCombined Federal + BC Provincial benefits

31.5% is non-refundable (applied against Federal income taxes owed)
**10% is non-refundable (applied against Provincial income taxes owed)
There is no cash benefit in BC for non-CCPCs

Saskatchewan Net SR&ED Benefit

CCPC

+ 41.5%*

For eligible costsCombined Federal + SK Provincial benefits

31.5% Federal portion is fully refundable (cash)
*10% Provincial portion is refundable for the first $1M in qualifying spend (i.e. $100K maximum cash refund).
Above $1M, Provincial program delivers 10% in non-refundable credits (applied against Provincial income taxes owed).
Total cap on the SK program is $1M in non-refundable + refundable credits.

Non-CCPC

+ 23.5%**

For eligible costsCombined Federal + SK Provincial benefits

13.5% is non-refundable (applied against Federal income taxes owed)
**10% is non-refundable (applied against Provincial income taxes owed)
There is no cash benefit in SK for non-CCPCs