Prior to January 1, 2020, Alberta had an SR&ED provincial tax credit program that piggybacked on the federal program and boasted a 10% refundable credit for claimants. This program ended in January of 2020, leaving companies in the province, who had become reliant on these credits to fund their R&D efforts, out in the cold.
The province had a plan however, and shortly introduced a new, enhanced version of the program, call the Alberta Innovation Employment Grant or IEG. The new name indicated the goal of the program, which was to encourage new jobs in the STEM sectors in the province by providing credits to growth stage companies and supporting new R&D spend and attracting new startups to the province.
This new program took effect with corporate expenditures incurred after January 1, 2021. While the program mirrors all of the criteria of the federal SR&ED program, there are some key differences to keep in mind.
Administration
First, the program is administered directly by the province. This means that the province has final say in approving a claim and has the ability to change the program if they desire. In effect, however, claimants will not see much of a burden on them when making a claim. Claim criteria is currently the same as the federal program, and claims on the provincial program can still be submitted directly with the federal program at the same time. There are more provincial forms to fill out, however, these must be submitted to ensure the provincial credits are received.
Who is eligible?
The IEG program is structured to encourage R&D spend by small and medium sized businesses. The credits that a company receives begins to be reduced once the company’s taxable reaches $10 million and is reduced to zero when it hits $50 million.
The expenditures claimed must also be spent within the province of Alberta. If they were spent in another province, they may be eligible for the equivalent SR&ED program in that province.
How much can a company receive?
The exciting part of the IEG program is the amount of credits that a company can receive. A company is eligible for an 8% credit on eligible expenditures, however this is topped up with an extra 12% on expenditures over a base amount. The base amount for a company is the average eligible R&D spend over the last two years. This means that a first time claimant will receive a 20% credit on their expenditures.
The program still piggybacks on the federal program, but any amount received from the provincial program is considered government assistance and therefore reduces the pool of eligible expenditures for the federal calculations. This is no different than the programs in the other provinces.
What is the filing deadline for the IEG?
An IEG claim has a longer deadline that the federal SR&ED program. A company can file up to 21 months after their year end. The federal SR&ED program has a deadline of 18 months after a year end to file. However, it is important to remember that the IEG claim will not be processed until after the federal SR&ED claim has been verified by the CRA. The SR&ED claim must be submitted before or at the same time as the IEG claim. In effect, however, most claimants will make the claim submissions together, so you should expect to file the IEG claim within 18 months of your year end.
For more information on the Alberta IEG program or any other provincial program, please contact us.
