Alberta – SR&ED Tax Credits
In Alberta, the SR&ED tax credit program provides a refundable tax credit to corporations that qualify in terms of SR&ED activities carried out in the province after December 2008. Partnerships, individuals or trust expenditures are generally not eligible for this program. In Alberta’s legislation, “SR&ED” has the same meaning as it does in the Income Tax Act of the country.
Qualified corporations in Alberta:
- Undertake SR&ED activities in the province during a particular taxation year; and
- Have a permanent establishment in the province at any time during a taxation year.
When a corporation qualifies for the SR&ED tax credits, it is entitled to tax credits that are equal to 10% of the lesser of:
- The maximum expenditure limit for the taxation year by the corporation; and
- The corporation’s eligible expenditures for the taxation year
A qualified corporation may deduct from its tax payable for the year the lesser of:
- The corporation’s SR&ED tax credits for the year; and
- The firm’s tax otherwise payable for the year.
The effective date for the SR&ED tax credits in Alberta that are used to reduce the qualified corporation’s tax payable is exactly the date on which the firm’s balance of tax is due for the taxation year. Any remainder of the SR&ED tax credits in Alberta is applied by the Alberta Treasury Board and Finance, Tax and Revenue Administration (TRA) to reduce any penalties or interest owing by the qualified corporation.
In the case where an amount of the SR&ED tax credit still remains, it is paid to the qualified corporation. The effective date for the application or payment is the later of the balance-due day and the date the qualified corporation’s claim for the Alberta SR&ED tax credit was received by the TRA.
Maximum Expenditure Limit
The maximum expenditure limit for a corporation to qualify is $4 million for any taxation year of 365 days that begin after December 31st, 2008. If a qualified corporation’s taxation year is less than 365 days, the maximum expenditure limit is multiplied by the ratio that the number of days in the taxation year is of 365.
Associated corporations that qualify must share the $4 million maximum expenditure limit. In Alberta, only the corporations that are claiming the SR&ED tax credits in the taxation year ending in the same calendar are associated.