The Innovation Employment Grant will hope to encourage economic growth by supporting small and medium-sized businesses that invest in research and development (R&D) with a grant worth up to 20% of qualifying expenditures.
The program is currently under development and is expected to launch on January 1, 2021, as part of Alberta’s Recovery Plan, and supporting legislation is said to be introduced in the fall of 2020.
The program will be directed 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.
What It Aims To-Do:
- Promote investment and diversification.
- Use a unique incremental approach to support R&D.
- Reward all R&D spending in Alberta, regardless of the industry.
- Complement the Job Creation Tax Cut by focusing on small and medium-sized firms in the earlier stages of operation, when they may not yet be profitable.
How It Should Work:
- Provide an 8% payment towards a corporation’s R&D spending in a given year, up to its base level of spending.
- A firm’s base level of spending will be determined by calculating its average qualifying R&D spending over the previous 2 years.
- Deliver a 20% payment towards a firm’s R&D spending that exceeds its base spending level.
- Focus on small and medium-sized firms by phasing out the grant for firms with between $10 million and $50 million in taxable capital.
- Provide benefits on up to $4 million in annual R&D spending.
- Be delivered through the corporate tax system.
Eligible expenditures will be the same as those that qualify for the federal Scientific Research and Experimental Development Tax Incentive Program.
More details will be available when legislation is introduced.