At the Federal level, the SR&ED (or “shred”) tax credit is refundable at a rate of 35% for up to a $3,000,000 refundable limit of eligible project expenditures. This refundable limit is depends on three factors. your company must be a Canadian Controlled Private Corporation. The total net income of your company is below $800,000. Taxable capital employed in Canada is less than $50,000,000.
Looking to determine your federal SR&ED refundable limt?
Each province uses their own SR&ED calculation to supplement the Federal SRED tax credit. See the table below for each province’s refund percentages.
|Province||Provincial SR&ED Rate||Provincial SR&ED ITC Refundable||Comments|
|Alberta||10%||Yes||The Alberta SRED tax credit is calculated from the Federal SR&ED expenditure pool|
|British Columbia||10%||Yes||The British Columbia SRED tax credit is calculated from the Federal SR&ED expenditure pool|
|Manitoba||20%||100% refundable for work performed with an approved research institute and 50% refundable for work performed in-house||The Manitoba SRED tax credit is calculated from the Federal SR&ED expenditure pool and also includes the cost of capital equipment for the use of scientific research and experimental development activities.|
|New Brunswick||15%||Yes||The New Brunswick SRED tax credit is calculated from the Federal SR&ED expenditure pool|
|Newfoundland||15%||Yes||The Newfoundland SRED tax credit is calculated from the Federal SR&ED expenditure pool|
|Nova Scotia||15%||Yes||The Nova Scotia SRED tax credit is calculated from the Federal SR&ED expenditure pool|
|Ontario||8%||Yes||The Ontario Innovation Tax Credit (OITC) mirrors the Federal SRED tax credit program and uses the Federal SR&ED expenditure pool to calculate the OITC tax credit|
|Prince Edward Island||0%||No||Prince Edward Island does not have an SR&ED tax credit program.|
|Quebec||30% – 14%. The Quebec SR&ED ITC rate starts at 30% and is reduced by 0.64% for every $1MM in total world wide assets above $50MM||Yes||The Quebec SR&ED tax credit is calculated from the sum of the eligible SRED salary base and 50% of the eligible sub-contractor expenditures incurred from scientific research or experimental development activities.|
|Saskatchewan||10%||Not refundable for SR&ED expenditures incurred after April 1, 2015. Refundable for SRED expenditures incurrred between March 18, 2009 – April 2015.||The Saskatchewan SRED tax credit is calculated from the Federal SR&ED expenditure pool|
|Yukon||15%||Yes, an additional 5% is refundable for eligible SR&ED expenditures made to the Yukon College||The Yukon SRED tax credit is calculated from the Federal SR&ED expenditure pool|
Looking to file a SRED tax credit claim and are not quite sure how? Our Montreal based consultants are able to guide you through the process and maximize your SR&ED tax credit claim.
Not Sure if you are Eligible for the SRED Tax Credit?
If you are in the business of developing, producing, manufacturing or improving products or processes you likely have projects eligible for the SR&ED tax credit. Often companies believe that they need to be performing cutting edge R&D to apply for the program. This is completely false. Our government recognizes the pivotal role of companies that perform SRED activities. So much so in fact, that the success or failure of your SR&ED projects is completely irrelevant in determining whether your project qualifies for the SRED tax credit
Industries likely to Take Part in SR&ED
- Jewelry Designers / Manufacturers
- Life Sciences
- Medical Devices
- Oil and Gas
- Package Design and Development
- Packaged Foods
- Plastic Mold Injection
- Print and Die
- Pulp and Paper
- Software Development
- Tool and Die
- Waste Management
- Apparel / textiles
- Commercial Bakeries
- Computer Engineering
- Fabrication (including, steel, plastics, wood, composite materials, etc.)
- Food Processing
- Furniture Manufacturers
- HVAC Companies
- IT Companies