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Rates & Rules
Provincial R&D Tax Credit Rates & Rules in Canada
Astounding Differences in Provincial R&D Tax Credits [PDF]
Detail comparison of Ontario and Quebec provincial R&D tax credits @ 2015 [PDF]
Summary of provincial and territorial research & development (R&D) tax credits Canada Revenue Agency
Ontario Interactive Digital Media Tax Credit (General Information)
Ontario Interactive Digital Media Tax credit RULE CHANGES, November 2, 2015 [PDF]
 
What's New
Scitax Bulletin #70 - $3.9M Fine and Criminal Conviction for SR&ED Claim [PDF]
Scitax Bulletin #69 - New Government Funding for Technology Business [PDF]
Scitax Bulletin #68 - Department of Finance Projects Decrease In SR&ED Payouts [PDF]
Scitax Bulletin #67 - CRA Appoints New Director General of SR&ED [PDF]
Easy Way Cattle Oilers Ltd. in Federal Court of Appeal November 2016 [PDF]
Scitax Bulletin #66 - Ottawa Tweaks SR&ED Legislation [PDF]
Scitax Bulletin #63 - Astounding Differences in Provincial R&D Tax Credits [PDF]


 

Rates & Rules

Provincial R&D Tax Credit Rates & Rules in Canada

Alberta 10% refundable
  • Available to corporations only.
  • Effective for taxation years ending after December 31, 2008 filing deadline is 21 months after the corporation's taxation year end versus 18 months for federal SR&ED ITC filings.
  • Maximum benefit payable is $400K (10% of $4M expenditure limit).
  • Eligible expenditures are same as for federal SR&ED ITC purposes. Expenditure limit NOT subject to same taxable income / taxable capital grind as federal SR&ED, however Alberta imposes its own grind formula whereby the $4M Alberta expenditure limit is reduced by amount of SR&ED ITCs received from Canada. See http://www.finance.alberta.ca/publications/tax_rebates/corporate/sred1.html#grind for details of grind calculation.
  • Expenditures must be incurred after December 31, 2008 and are limited to not more than expenditure limit of $4 million per taxation year.
  • The maximum expenditure limit must be shared and allocated among associated corporations.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.


  • British Columbia 10% refundable & non-refundable
  • Available to corporations and partnerships.
  • No ceiling on maximum benefit, however maximum cash refund is limited to $300K (10% of $3M expenditure limit).
  • Only Canadian-controlled private corporations (CCPCs) are eligible for the refundable credit on expenditures up to the $3M expenditure limit.
  • CCPCs get non-refundable ITC on expenditures in excess of the expenditure limit.
  • Other corporations receive a non-refundable ITC only (no cash refund).
  • Expenditure limit subject to same taxable income / taxable capital grinds as federal SR&ED.
  • Eligible expenditures are same as for federal SR&ED ITC purposes.
  • The credit can be claimed only once all other tax credits have been claimed. Unused non-refundable ITCs may be carried forward 10 years (vs 20 for federal SR&&ED ITCs) and carried back three years. All or part of the non-refundable credit can be renounced each year.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&&D expenditures claimed for SR&&ED ITCs from Canada.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.
  • For additional info see: http://www.sbr.gov.bc.ca/documents_library/bulletins/cit_007.pdf


  • Manitoba 15% refundable & non-refundable
  • Available to corporations only.
  • No ceiling or limit on maximum benefit.
  • Eligible expenditures are same as for federal SR&ED ITC purposes. However 100% of contract payments to certain Manitoba research institutes qualify for the Manitoba credit whereas only 80% of such payments would qualify federal SR&ED.
  • NEW per budget 2017, for expenditures made after 11 April, 2017 the 20% tax credit is reduced to 15%
  • Prior to 2010, the 20% tax credit was non-refundable (ITC only).
  • Up to 2012, the 20% tax credit is fully refundable ONLY for expenditures incurred after 2009 for expenditures made to a qualifying research institute located in Manitoba.
  • From 2012 the 20% tax credit is 50% refundable for in-house R&D expenditures (i.e., R&D not undertaken under contract with an institute).
  • Unused non-refundable credits earned in taxation years ending after 2003 may be carried forward 10 years and carried back three years. The 10 year carry forward was increased to 20 years in the Manitoba 2015 budget.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.
  • For additional info see: http://www.gov.mb.ca/finance/business/ccredits.html


  • New Brunswick 15%
  • Available to corporations and individuals only.
  • 100% refundable to all corporations.
  • No expenditure limit.
  • No ceiling or limit on maximum benefit.
  • Eligible expenditures are same as for federal SR&ED ITC purposes.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.
  • For additional info see: http://www2.gnb.ca/content/gnb/en/departments/finance/taxes/taxcredit.html


  • Newfoundland and Labrador   15%
  • Available to corporations and individuals only.
  • 100% refundable to all corporations.
  • No expenditure limit.
  • No ceiling or limit on maximum benefit.
  • Eligible expenditures are same as for federal SR&ED ITC purposes.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • For additional info see: http://www.fin.gov.nl.ca/fin/tax_programs_incentives/business/scientificresearch.html


  • Northwest Territories NO provincial tax credit
  • North West Territories has no provincial tax credit.
  • However corporations, partnerships and individuals located there can claim SR&ED ITCs from Canada at the federal level.
  • Since there is no provincial tax credit, R&D expenditures claimed for SR&ED ITCs from Canada are not subject to any reduction "government assistance" arising from the provincial tax credit . This may be a favourable or neutral situation for CCPCs with little or no taxable income that are eligible for a cash refundable SR&ED ITCs from Canada who would otherwise see the amount of their cash refund reduced by a non-refundable provincial tax credit.


  • Nova Scotia 15%
  • Available to corporations and individuals only.
  • 100% refundable to all corporations.
  • No expenditure limit.
  • No ceiling or limit on maximum benefit.
  • Eligible expenditures are same as for federal SR&ED ITC purposes.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • For additional info see: http://www.novascotia.ca/finance/en/home/taxation/tax101/businesstax/corporateincometax/researchanddevelopmenttax.aspx


  • Nunavut NO provincial tax credit
  • Nunavut has no provincial tax credit.
  • However corporations, partnerships and individuals located there can claim SR&ED ITCs from Canada at the federal level.
  • Since there is no provincial tax credit, R&D expenditures claimed for SR&ED ITCs from Canada are not subject to any reduction "government assistance" arising from the provincial tax credit . This may be a favourable or neutral situation for CCPCs with little or no taxable income that are eligible for a cash refundable SR&ED ITCs from Canada who would otherwise see the amount of their cash refund reduced by a non-refundable provincial tax credit.


  • Ontario Innovation Tax Credit (OITC):
    8% to 10% refundable
  • Available to corporations only.
  • Eligible expenditures are same as for federal SR&ED ITC purposes.
  • Cash refund to all corporations, but ceiling limits apply.
  • The OITC rate will decrease to 8% (from 10%), effective for eligible R&D expenditures incurred in taxation years ending on or after June 1, 2016. The rate reductions will be prorated for taxation years straddling June 1, 2016.
  • Maximum benefit "ceiling" is $300K (10% of $3M Canada federal expenditure limit), however the $3M expenditure limit must be shared and allocated among associated corporations on a worldwide basis.
  • AND the $3M expenditure limit is subject to reduction (ground down) by taxable income and taxable capital according to the same formulae used to determine the federal expenditure limit for SR&ED purposes.
  • In short if the taxable income in the prior exceeds $800K OR taxable capital exceeds $50M, both the expenditure limit and the OITC are reduced to $nil (i.e. no OITC)
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.
  • For additional info on this tax credit see: http://www.fin.gov.on.ca/en/credit/oitc/


  • Ontario Business-Research Institute Tax Credit (OBRITC):
    20% refundable
  • Available to corporations only.
  • Cash refund to all corporations, but ceiling limits apply; maximum benefit is $4M (20% of $20M)
  • Applies only to R&D services purchased from an approved university, college or other research institute located in Ontario.
  • Expenditures must also be incurred in respect of an R&D activity that the Canada Revenue Agency allows as eligible for SR&ED ITC purposes; therefore to claim OBRI claimant must also file a federal SR&ED claim for that activity.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province at an approved research institution.
  • For additional info on this tax credit see: http://www.fin.gov.on.ca/en/credit/obritc/
  • For a list of approved research institutions see: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/crprtns/prv/on/lgbl-rsrchnst-eng.html


  • Ontario Research and Development Tax Credit (ORDTC):
    3.5% to 4.5% non-refundable
  • Available to corporations only.
  • Eligible expenditures are same as for federal SR&ED ITC purposes.
  • The ORDTC credit is non-refundable and is applicable for taxation years ending after 2008.
  • For taxation years that commence after May 31, 2016, qualifying corporations can claim a 3.5 per cent non refundable tax credit on eligible scientific research and experimental development expenditures performed in Ontario. For taxation years that end before June 1, 2016, the tax credit rate is 4.5 per cent. The tax credit rate is prorated for taxation years straddling June 1, 2016.
  • ITCs can be applied only to reduce ONTARIO corporate tax payable (i.e. cannot be applied to federal corporate income tax).
  • Unused ITCs may be carried forward 20 years and carried back three years (but only back to taxation years ending after 2008).
  • ORDTC may be "waived" in order to gain additional ITCs at the federal level. Most likely this would be done by a taxpayer that has no Ontario corporate tax payable AND is eligible for a SR&ED ITCs as a cash refund at the federal level e.g. waiving $3 of ORDTC would increase the SR&ED refund by $1.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.


  • Prince Edward Island NO provincial tax credit
  • Prince Edward Island has no provincial tax credit.
  • However corporations, partnerships and individuals located there can claim SR&ED ITCs from Canada at the federal level.
  • Since there is no provincial tax credit, R&D expenditures claimed for SR&ED ITCs from Canada are not subject to any reduction "government assistance" arising from the provincial tax credit . This may be a favourable or neutral situation for CCPCs with little or no taxable income that are eligible for a cash refundable SR&ED ITCs from Canada who would otherwise see the amount of their cash refund reduced by a non-refundable provincial tax credit.


  • Quebec R&D Wage Tax Credit:
    Canadian-controlled corporations 30% refundable
    Others 14% refundable
  • Available to corporations and partnerships.
  • 100% refundable to all corporations and partnerships.
  • No maximum ceiling (UPPER limit) on the AMOUNT of credit, however the benefit RATE drops from 30% to 14% as the company's assets exceed $50 million.
  • Neither the Canada federal expenditure limit nor the expenditure limit grinds apply.
  • However Quebec sets a LOWER limit for eligible expenditures that sets the minimum size claim that can be made.
  • This lower limit ranges from $50K to $225K depending on company size as determined by assets. In short this means that the in order to receive any benefit under the Quebec R&D wage credit, the eligible expenditures must exceed $50K.
  • The lower limit for is calculated as:
        $Eligible = Actual $Spent MINUS $Threshold
            where
        $Threshold is a linear sliding scale amount ranging from $50K (for companies with less than $50M assets) to $225K for (for companies with more than $75M assets). For companies with assets between $50M and $75M, this scaling is such that for each $1.00 of asset above $50M, $Threshold increases by $0.007.
  • Eligible expenditures are ONLY wages* paid to persons who perform R&D activity in Quebec that the Canada Revenue Agency allows as eligible for SR&ED ITC purposes; therefore to claim the Quebec R&D Wage Tax Credit the claimant must also file a federal SR&ED claim for that activity.
  • * "wages" means 100% of the T4 wage amount paid to persons who are employed by the claimant at a site in Quebec OR 50% of the labour component of a contracted R&D service purchased from a service provider located in Quebec.
  • *The Quebec R&D wage credit does NOT apply to overhead (proxy or traditional) or materials.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • Claimant must file a tax return in the province and the expenditures must be for work carried out in the province. In certain circumstances it may be possible for a company to claim the Quebec R&D wage credit even if it does not itself have a permanent establishment in the province.
  • For details of the minimum claim threshold see: https://www.scitax.com/pdf/R_D_Pages_from_QUEBEC_GOV_FALL_FINANCIAL_UPDATE_2-Dec-2014.pdf
  • For additional information see: http://www.revenuquebec.ca/en/sepf/formulaires/rd/rd-1029_7.aspx


  • Saskatchewan 10% non-refundable (as of 1-Apr-2015)
  • Available to corporations and partnerships only.
  • No ceiling or limit on maximum benefit.
  • Eligible expenditures are same as for federal SR&ED ITC purposes.
  • The credit is non-refundable, the ITCs can be applied only to reduce SASKATCHEWAN corporate tax payable (i.e. cannot be applied to federal corporate income tax).
  • Unused ITCs may be carried forward 10 years and carried back three years (but only back to taxation years ending after 2008).
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • It is NOT possible to renounce the credit in order to gain access to additional cash refundable federal SR&ED ITCs from Canada.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.
  • For additional information see: http://www.finance.gov.sk.ca/Default.aspx?DN=7210d60f-4263-4bf8-9f59-dbbbd8d64f7a


  • Yukon 15% to 20%
  • Available to corporations and individuals only.
  • 100% refundable to all corporations.
  • No expenditure limit.
  • No ceiling or limit on maximum benefit.
  • Eligible expenditures are same as for federal SR&ED ITC purposes.
  • Claimant must have permanent establishment and file a tax return in the province and the expenditures must be for work carried out in the province.
  • The credit is considered to be "government assistance" and therefore must be subtracted from R&D expenditures claimed for SR&ED ITCs from Canada.
  • For additional info see: http://www.finance.gov.yk.ca/rd_taxcredit.html


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