Canada: 2012 Provincial And Territorial R&D Tax Credits (October 12, 2012)

Last Updated: November 15 2012
Article by Vik Sachdev

Canada offers one of the most favourable packages of R&D tax incentives among the major industrialized countries. In addition to the federal incentives, taxpayers carrying on R&D can also benefit from provincial or territorial tax credits. To help individuals and corporations maximize their potential R&D tax incentives, a summary of the rules for provincial and territorial R&D tax credits follows.

All R&D tax credits are available to corporations. In Newfoundland and Labrador, Quebec and the Yukon, individuals can also claim the credits. The credits can be fully claimed against a taxpayer's provincial or territorial income tax.

2012 provincial and territorial R&D tax credit changes

  • Alberta - enhanced for taxation years ending after March 31, 2012 (see footnote 1).
  • Saskatchewan - revised for R&D expenditures incurred after March 31, 2012 (see footnote 14).


For R&D expenditures incurred Rate Refundable? Carry back Carry forward
After Before


Dec. 31/2008 n/a 10% 1 Yes 3 n/a

British Columbia

Qualifying CCPCs Aug 31/1999 Sep. 1/2014
Corporations in general No 3 yrs 10 yrs 5


Mar. 8/2005 n/a 20% Yes/No 4
Mar. 11/1992 Mar. 9/2005 15%

New Brunswick

Dec. 31/2002 n/a 15% Yes n/a
Feb. 25/1994 Jan. 1/2003 10% No 3 yrs 7 yrs

Newfoundland and Labrador

Dec. 31/1995 n/a 15% Yes n/a

Northwest Territories

No territorial R&D tax incentives

Nova Scotia

Tax years ending
Dec. 31/1993
n/a 15% Yes n/a
Dec. 31/1983 Tax years ending
Jan. 1/1994
10% No 3 yrs 7 yrs


No territorial R&D tax incentives


Innovation tax credit (OITC) Tax years ending May 4/1999 6 n/a 10% 6 Yes n/a
Business research institute tax credit (OBRI) May 6/1997 20% 7
R&D tax credit
Tax years ending Dec. 31/2008 4.5% No 3 yrs
20 yrs

Prince Edward Island

No provincial R&D tax incentives


R&D wage tax credit April 21/2005 n/a 17.5% or 37.5% 10 Yes n/a
June 12/2003 April 22, 2005 17.5% or 35% 10
Tax years beginning
May 9/1996 9
June 13/2003 20% or 40%
University, public research centre and research consortium tax credit 13 June 12/2003 n/a 35% 12
April 30/1987 June 13/2003 40% 12
Tax credit on dues and fees paid to a research consortium 13 May 14/1992 June 13/2003 40%
Private partnership tax credit 13 March 23/2006 n/a 35%
Pre-competitive tax
credit 13
June 12/2003 March 24/2006 35%
Jan. 1/1997 June 13/2003 40%


Corporations in general March 31/2012 n/a 15% No 3 yrs 10 yrs
March 18/2009 April 1/2012
Qualifying CCPCs n/a Yes 14 n/a
All corporations March 19/1998 March 19/2009 No 3 yrs 10 yrs


June 30/2000 or Dec. 31/2000 15 n/a 15% 15 Yes n/a


1. Alberta's credit equals 10% of eligible SR&ED expenditures to a maximum expenditure level of $4 million (maximum credit is $400,000). For taxation years ending after March 31, 2012, taxpayers will no longer be required to deduct the federal SR&ED investment tax credit when calculating Alberta's SR&ED refundable tax credit.

2. British Columbia extended its SR&ED tax from August 31, 2004 to August 31, 2009 and then to August 31, 2014.

3. British Columbia's refundable R&D tax credit is limited to 10% of the lesser of: (a) eligible British Columbia R&D expenditures and (b) the federal R&D expenditure limit (i.e., $3 million or less for taxation years ending after February 25, 2008).

4. Manitoba's 20% credit is:

  • fully refundable for eligible expenditures incurred after 2009 by a corporation with a permanent establishment in Manitoba that carries on research and development in Manitoba under an eligible contract with a qualifying research institute; and
  • partially refundable (25% in 2011 and 50% after 2011) for in-house R&D expenditures.

5. Manitoba extended the carry-forward period from 7 years to 10, for 2004 and later taxation years.

6. Ontario corporations qualify for the refundable tax credit on qualified expenditures incurred up to the expenditure limit ($3 million* or less) that must be shared by associated corporations. The expenditure limit is reduced when:

  • the previous year's taxable capital of the worldwide associated group is between $25 million and $50 million; or
  • the previous year's taxable income of the worldwide associated group is between $500,000* and $800,000*.

* Increases to the expenditure limit and taxable income thresholds follow:


Expenditure limit Taxable income thresholds Maximum annual credit
Phase-out starts (i) Phase-out ends
Taxation years ending before 2003 $2 million $200,000 $400,000 $200,000
after 2002 $300,000 $500,000
after 2006 $400,000 $600,000
after February 25, 2008 (ii) $3 million $700,000 $300,000
generally, after 2009 (iii) $500,000 $800,000
  • (i) The taxable income thresholds have increased as a result of increases in the federal small business limit.
  • (ii) To determine the expenditure limit for a taxation year that includes February 26, 2008, separate calculations with the old and new phase-out ranges are required.
  • (iii) The thresholds apply to a taxation year only if the previous taxation year ends after 2008.

100% of current expenditures and 40% of capital expenditures are eligible for the credit.

The OITC was originally available to Canadian-controlled private corporations for taxation years ending after December 31, 1994. For taxation years ending after May 4, 1999, the credit is extended to all public and private corporations and is no longer limited to the amount eligible for the federal 35% R&D tax credit.

7. Ontario's credit is calculated as 20% of qualifying payments (up to $20 million annually on an associated basis) to Ontario eligible research institutes. The maximum annual credit is $4 million.

8. For taxation years ending after 2008, the R&D tax credit replaces Ontario's deduction for the portion of the federal investment tax credit relating to qualifying Ontario R&D expenditures. The credit can be carried back only to taxation years ending after 2008.

9. Before this date, Quebec's R&D wage tax credit was subject to different eligibility criteria, rates and restrictions.

10. Quebec Canadian-controlled corporations with less than $50 million* in assets, on an associated basis, can claim the 37.5% rate on up to the spending limit of $3 million* of R&D wages, on an associated basis. For those with assets between $50 million* and $75 million*, the 37.5% rate is gradually reduced to 17.5%. The rate is 17.5% for all other taxpayers. The rate increased from 35% to 37.5% on R&D expenditures incurred after April 21, 2005. For expenditures incurred before June 13, 2003, the 35% rate was 40% and the 17.5% rate was 20%. 50% of payments to arm's length subcontractors are eligible for the credit. All thresholds are in respect of the previous year, on a worldwide associated basis.

* Increases to in the spending limit and asset thresholds follow:

Spending limit Asset thresholds
Phase-out starts Phase-out ends
Effective before December 5, 2006 $2 million $25 million $50 million
after December 4, 2006 $50 million $75 million
taxation years ending after March 13, 2008 $3 million (i)
  • (i) For taxation years that include March 13, 2008, the $3 million spending limit is pro-rated based on the number of days in the taxation year after March 13, 2008.

11. Corporations that qualified for Quebec's R&D wage tax credit at the 40% rate (i.e., Canadian-controlled corporations with assets under $25 million) qualified for an additional 15% tax credit based on the increase in all R&D expenditures over the average expenditures in the last three taxation years. This additional credit was to have been available until taxation years beginning before July 1, 2004, but its expiry was accelerated to taxation years beginning after June 12, 2003.

12. In some cases, Quebec's 35% (40% before June 12, 2003) credit is available on 80% of payments to certain eligible entities (e.g., universities and public research centres).

13. The Quebec tax credit for:

  • dues and fees paid to a research consortium is part of the tax credit for university, public research centre and research consortium after June 12, 2003; and
  • pre-competitive research is replaced by the private partnerships tax credit after March 23, 2006.

14. For R&D expenditures incurred after March 31, 2012, Saskatchewan's 15% tax credit is refundable only for Canadian-controlled private corporations (CCPCs) and only on qualifying expenditures incurred up to the expenditure limit ($3 million or less) annually.

15. The credit applies to qualified expenditures incurred in the Yukon after June 30, 2000 for corporations, and after December 31, 2000 for individuals.

16. Yukon's rate is 20% on R&D expenditures made to the Yukon College.

PwC comments

Among the major industrialized countries, Canada offers one of the most favourable packages of R&D tax incentives, which includes provincial and territorial tax credits available to corporations that conduct qualified SR&ED in the particular jurisdiction.

In addition to provincial and territorial incentives, corporations carrying on SR&ED can also benefit from federal tax credits discussed in Federal investment tax credits for R&D and property: 2011 - 2012 and Federal R&D tax credits: 1998 - 2010. For federal tax purposes, most current and certain capital expenditures on account of SR&ED are deductible. Provincial and territorial tax credits are considered to be government assistance for federal tax purposes, and therefore reduce expenditures that are eligible for the federal SR&ED deduction and federal investment tax credits.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.