Nova Scotia – SR&ED Tax Credits

The SR&ED tax credit in Nova Scotia is administered by the Canada Revenue Agency (CRA), like in most other Canadian provinces. The body is responsible for the program and acts on behalf of the provinces and territories as well as on behalf of the federal government. The SR&ED tax credit in Nova Scotia is fully refundable at the rate of 15% of all eligible expenditures, regardless of the size of the corporations that are eligible for the credits.

The credit offers tax relief to Nova Scotia corporations that incur qualified scientific research and experimental development expenditure in Nova Scotia as defined by the federal Income Tax Act. The credit is usually claimed in conjunction with the federal SR&ED tax credits in Nova Scotia. According to the rules and regulations of this province, the Nova Scotia credit should be claimed on Schedule 340 for taxation years 1998 and later.

The credit is based on qualified expenditures eligible for the SR&ED tax credit:

• The SR&ED credit applicant is usually advised to prepare the federal SR&ED tax credit filing in preparation for the provincial credit. The federal credit is claimed on form T661. The Nova Scotia tax credit is claimed on Schedule 340 of the Nova Scotia T2 form.
• There is a lot of detail in the federal credit rules and the potential claimants are usually advised to review federal documentation regarding the SR&ED credit.

Refunds are available to corporations that incur qualified SR&ED expenditures in the province. This occurs when the qualified corporation has or would have taxable income allocated to the province. The refund amount is equal to the amount of the credit in excess of tax otherwise payable under the Tax Act.