Alberta Cancels its SR&ED Program – Now What?
In 2019, Alberta released their provincial budget, revealing the cancellation of the SR&ED provincial tax credit effective January 1st 2020. This credit is claimed in arrears, which means any company with a December 31st year end are still learning of this change. In previous years, Alberta’s credit program had a generous 10% refundable credit up to $400k. For the year 2020, Alberta companies will only be eligible for Federal SR&ED tax credits.
In July of 2020, Alberta’s premier announced the launch of the Innovation Employment Grant (IEG) which is set to replace the SR&ED. The grant pertains to qualified expenditures that were incurred in Alberta after December 31, 2020. This program will offer grants up to 20% of a company’s R&D costs incurred in Alberta. Qualifying corporations could receive an 8% grant for their baseline and an additional 12% grant for any spending above this, up to a maximum of $4 million annually. This replacement grant program was introduced after backlash from the SR&ED cancellation, but is aimed primarily at small and medium-sized entities. Companies with more than $50 million in taxable capital are ineligible. This grant was designed to continue complementing the federal SR&ED credit program.