Most provinces and territories have their own incentives for research and development, which work alongside with federal SR&ED. The provincial tax credit is calculated first, and the federal ITC is calculated on the remainder of the claim. To follow are some of the changes proposed by the Western provinces.
Alberta’s SR&ED Benefits Enhanced
Alberta, who currently provides a 10% refundable tax credit, has further enhanced the SR&ED program by $25M in 2012. Alberta’s 2012 budget proposed to eliminate the “double-grind” of Alberta’s SR&ED program. Currently, the SR&ED benefits received from the Federal government are deducted from the qualified expenditures for the purposes of computing Alberta SR&ED in the subsequent year. It has been proposed that this “grind” will be eliminated, effective for tax years ending after March 31, 2012.
Saskatchewan’s SR&ED Program Scaled Back
Currently, Saskatchewan offers a 15% refundable SR&ED benefit. In Saskatchewan’s 2012/2013 budget, effective for expenditures on or after April 1, 2012, it was proposed that non-CCPCs be excluded from receiving refundable benefits, and that CCPCs be limited to an annual maximum of $3 million in qualifying expenditures.
Status Quo for British Columbia’s SR&ED Program
The current BC SR&ED program (with a 10% ITC rate) expires on August 31, 2014. The recent 2012 BC budget does not introduce any changes to the SR&ED program, but stops short of extending the program’s mandate.