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Scientific Research and Experimental Development Tax Credit Frequently Asked Questions
Questions:
Who can claim the SR&ED tax credit? |
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The SR&ED tax credit can be claimed by a qualifying corporation that carries on scientific research and experimental development (SR&ED) in British Columbia after August 31, 1999 and before September 1, 2014.
Please see Bulletin CIT 007, British Columbia Scientific Research and Experiment Development Tax Credit for more information. |
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A refundable credit of 10% of the lesser of the corporation's:
- SR&ED qualified B.C. expenditures for the tax year
- expenditure limit as defined under Section 127(10.2) of the federal Income Tax Act
A non-refundable credit may be claimed in excess of the expenditure limit. The non-refundable credit for a tax year is:
- 10% of the corporation's SR&ED qualified B.C. expenditure for the year less
- the amount of its refundable credit for that year and any amount renounced for that year
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The refundable credit cannot exceed 10% of the expenditure limit, which is generally
$3 million. This limit is determined according to Section 127(10.2) of the federal Income Tax Act and may be reduced as described in the Canada Revenue Agency's Interpretation Bulletin IT-151R5.
The amount of annual non-refundable tax credit that may be deducted in a tax year is limited to the amount of the corporation's income tax payable for that year. |
Does the change in the phase out of the federal expenditure limit change the expenditure limit for calculating the SR&ED tax credit? |
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Yes, the expenditure limit for calculating the refundable credit is the federal expenditure limit. |
Can a corporation claim both the SR&ED tax credit and the Manufacturing and Processing tax credit for the same capital expenditure? |
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No, the SR&ED and M&P tax credits cannot be claimed on the same capital expenditure.
To qualify for the SR&ED tax credit, all (90% or more) of the capital expenditure's operating time must be used for SR&ED in British Columbia.
To qualify for the M&P tax credit, the property must be used in British Columbia primarily (50% or more of its operating time) for manufacturing or processing goods for sale or lease. |
Can the non-refundable credit be carried forward or back? |
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The non-refundable credit can be carried forward 10 years or back three years. |
How do I claim the credit? |
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You can claim the credit by completing Form T666 and attaching it to the top of the T2 Corporation Income Tax Return. The claim must be filed within 18 months of the end of the tax year to which the SR&ED qualified B.C. expenditure relates. The Canada Revenue Agency will not process
late-filed returns. |
What form do I use for claiming the credit? |
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Please use Form T666 to claim the SR&ED tax credit. |
Who administers the credit? |
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The Canada Revenue Agency (CRA) administers the credit on behalf of the province. Please contact the CRA at 1-866-317-0473 or click here for more information or any questions about the SR&ED tax credit.
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