News & updates


SR&ED Program benefit
Federal Investment Tax Credits and Québec R&D Wage Tax Credits
At the Federal level, taxpayers qualify for 20% tax credit on qualifying SR&ED expenditures. The ITC can be applied against federal taxes payable in that year, carried forward and claimed in the twenty subsequent years or carries back and applied against federal taxes payable in the three prior years.

Qualifying Canadian Controlled Private Corporations (CCPC) qualify for a refundable tax credit of up to 35% on the first $2 million in expenditures. After applying the tax credits against taxes payable, taxpayers receive a cash refund on the balance of tax credits as follow: 100% refund on tax credits calculated on qualified current SR&ED expenditures; and 40% cash refund on tax credits calculated on qualified capital SR&ED expenditures.

At the Québec level, the tax credits are always refundable. Taxpayers qualify for 17.5% tax credit on qualifying SR&ED expenditures. Qualifying CCPC benefit from a tax credit of up to 37.5% on the first $2 million in eligible salaries and wages paid in a given taxation year. Note that to be eligible for the Québec tax credit, you must carry on a business and have an establishment in Québec.

The Québec tax credits reduce the expenses to calculate the federal tax credits. They are not taxable in Québec; however they are taxable in the current year at the Federal level (reduction of R&D expenditure pool). Federal ITC’s claimed in one year are taxable at the Federal and Québec level in the subsequent year (reduction of R&D expenditure pool).

Federal
ITC Rate
Rate of Refundability
Current
Capital
Québec
WTC Rate
Rate of Refundability
Qualifying CCPC    
Up to $2 million in expenditures
35%
100%
40%
37.5%
100%
Remaining expenditures
20%
40%
40%
17.5%
100%
Other corporations
20%
-
-
17.5%
100%