Alberta Innovation Employment Grant for Research & Development

Contact Neufeld Legal PC for your incorporation legal work at 403-400-4092 or Chris@NeufeldLegal.com

The Alberta Innovation Employment Grant (IEG) is provincial equivalent of the federal Scientific Research and Experimental Development (SR&ED) tax incentive program, which is designed to encourage research and development (R&D) activities within the province of Alberta, particularly for small and medium-sized businesses.

The IEG is a refundable tax credit that works alongside the federal SR&ED program.

• Eligibility: The grant is available to corporations that conduct R&D in Alberta and are eligible for the federal SR&ED program. It's specifically targeted at small and medium-sized enterprises (SMEs), with benefits being phased out for companies with taxable capital between $10 million and $50 million. Companies with taxable capital of $50 million or more are not eligible.

• Grant Structure: The IEG offers a tiered grant system based on a corporation's R&D spending.

  • An 8% grant for eligible R&D spending up to the corporation's base spending level.

  • An additional 12% grant for eligible R&D spending that exceeds the base spending level.

  • This means a first-time claimant or a company with no prior R&D spending will receive a 20% grant on their eligible expenditures.

• Expenditure Limit: The grant applies to a maximum of $4 million in annual R&D spending.

• Administration: The IEG is claimed through the corporate tax system by filing a specific schedule with the Alberta Corporate Income Tax Return (AT1). Payments are processed after the federal SR&ED program has verified the qualifying expenses.

While the Alberta IEG parallels the federal SR&ED program in terms of eligible expenses and activities, there are some key differences:

• Purpose: The federal SR&ED program is a tax incentive, while the IEG is a grant delivered through the tax system.

• Jurisdiction: IEG applies only to R&D expenditures carried out in Alberta.

• Impact on Federal SR&ED: Any amount received from the IEG is considered government assistance. This reduces the pool of eligible expenditures for the federal SR&ED calculation.

As such, when your corporation is looking to optimize the availability of federal and provincial tax incentive programs, and other corporate tax strategies, your business can look to the Calgary, Alberta law firm of Neufeld Legal P.C. Contact us at 403-400-4092 or via email at Chris@NeufeldLegal.com.

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