After a disappointing withdrawal from the Scientific Research and Experimental Development (SR&ED) program as of December 31, 2019, the Government of Alberta has announced the development of an Innovation Employment Grant, which is currently set to be introduced on January 1, 2021. This new program will promote research and development (R&D), encourage the creation of technology development jobs, and support economic diversification and growth. Funding will be directed toward small and medium-sized businesses that invest in R&D with grants worth up to 20% of qualifying expenditures.
The Innovation Employment Grant will have several exciting and unique features, including a base level credit of 8% of eligible expenditures that may be boosted to 20% for expenditures in excess of an organization’s previous two-year base level R&D spend. Further, this incentive will be delivered in advance to support R&D projects in real time, rather than months after the R&D activity, thereby strongly encouraging management to accelerate the timing of R&D initiatives.
The program will be directed to small and medium-sized firms by phasing out the incentive for firms with between $10 million and $50 million in taxable capital and covering up to $4 million in annual R&D spending.
The grant will be delivered through the corporate tax system under the SR&ED expenditure rules but will introduce a variant on the provincial refundable payment mechanism. The legislation to enact this incentive is expected to be introduced in the fall of 2020 and Ryan continues to monitor the development of this important program.
Further details on the Alberta Innovation Employment Grant can be found at:
https://www.alberta.ca/innovation-employment-grant.aspx
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If you have any questions about how this impending change might impact your organization, please do not hesitate to call the Ryan TaxDirectTM line at 1.800.667.1600.