With the cancellation of the SR&ED Provincial Tax Credit in Alberta last year, the Government of Alberta decided they would replace the SR&ED Tax Credit with the Innovation Employment Grant (IEG). With Alberta’s 2021 Budget announcement last week, we now have a clear understanding of what the IEG is and who can capitalize on the funding program.
What Is The Innovation Employment Grant (IEG)?
By replacing the SR&ED Tax Credit Program Provincially, the IEG is encouraging all Alberta small and medium-sized companies (SMEs) to invest in their research and innovation. This 20% program on qualifying expenditures will help grow a company in Alberta to compete with other businesses across Canada.
What Is My Companies Return On Investment (ROI)?
– 8% SR&ED spending in Alberta, up to a companies base level spending.
– 20% SR&ED spending in Alberta if the spending exceeds the companies base level spending.
(The government of Alberta calculates the base level by the average qualifying SR&ED spend over the previous two years.)
– 20% for Startup firms that relocate to Alberta. Their entire first year of qualifying expenditures will receive a 20% ROI.
– $4 million dollar cap annually on SR&ED
What Companies Can Qualify For The IEG?
– Companies operating in Alberta conducting SR&ED
– Intended for small and medium-sized companies (SMEs) with less than $50 million in taxable capital.
– Expenditures must be incurred starting January 1st, 2021 to qualify.
At What Business Cycle Does The IEG Cover?
Since the IEG is replacing the SR&ED Provincial Tax Credit, similar rules apply when claiming. The Government of Alberta will be looking at the Startup/Growth Phase of a company. When it comes to Commercialization and the Sales Phase, the Job Creation Tax Cut covers that portion of a companies business cycle.
How Does My Company Apply?
Companies can apply to the IEG by completing a Schedule 29 form to the Alberta Corporate Income Tax Return.
When Is The IEG Available?
The IEG has officially opened as of January 1st, 2021.
Can My Company Still Apply For The Federal SR&ED Tax Credit?
Companies in Alberta can still claim the Federal SR&ED Tax Credit. The IEG will be processed together with the Federal SR&ED Tax Credit and companies will not receive payment until Canada Revenue Agency (CRA) has verified the Federal qualifying expenses.
Since the IEG is identical to the SR&ED Tax Credit program when it comes to qualifying expenditures, Braithwaite Canada will introduce to your team a 7-step process to maximize your companies claim. From detailed technical write-ups, CRA-friendly costing templates, and filing on your behalf, trust the experts at Braithwaite Canada. For a detailed breakdown of our 7-step process, please click here
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