On July 22, 2020, Premier Jason Kenney, Finance Minister Travis Toews, and Economic Development, Trade and Tourism Minister Tanya Fir revealed the Innovation Employment Grant for Alberta during a news conference. This post summarizes the conference and provides an explanation of how this new grant will impact our readers.
LIVE: Alberta’s new Innovation Employment Grant, a 20% grant for spending on R&D, will make our province a magnet for investment and job creation in the technology and innovation sector. #ABLeg https://t.co/486LDTuJLA
— Jason Kenney (@jkenney) July 22, 2020
July 22, 2020, Press Conference
Premier Kenny stated:
This program will help small and medium sized businesses that make up the bulk of the start up sector. Alberta’s government will do this by offering a grant of up to 20% for businesses that are investing in research and development. This supports those firms and companies that are investing in Alberta, that are creating jobs here and are helping to create a more diversified economy.
Beginning January 1, 2021, the Innovation Employment Grant will provide phased funding for small and medium-sized businesses. It was revealed that grant will provide at a minimum, eight percent on a firm’s base expenditures, up to 20 percent on spending that is above the company’s average over the previous two years.
Finance Minister Toews explained the Innovation Employment Grant in further detail:
It will reward companies that increase their spending on research and development activities. The grant will deliver and 8% benefit on the firms base level of R&D spending providing stable and predictable support for innovation. But the incremental approach comes into play when companies increase their R&D spending. The IEG will offer a 20% benefit on spending that is above the firm’s average R&D spending for the previous 2 years.
Premier Kenny also said, “This means there is support for these job creators at every stage of their development, including their start-up phase when they aren’t actually reporting profits but they’re in that critical phase that so many start-ups don’t make it through.” He commented that with the addition of this program, Alberta will have the strongest business incentive in Canada, as well as, the lowest tax rates when the businesses are profitable. With the combination of the two, the hope is to draw more companies to Alberta, create more jobs in the province, and increase the economy.
This grant is targeted toward small and medium-sized businesses. Companies will begin to be phased out of the program once their taxable capital reaches $10 million, and fully phased out once their taxable capital reaches $50 million.
SR&ED in Alberta
Alberta eliminated its provincial Scientific Research and Experimental Development (SR&ED) investment tax credits (ITCs) on January 1, 2020. From 2009-2019 the SR&ED ITC rate was 10% in Alberta. The Innovation Employment Grant can be seen as a replacement for SR&ED ITCs in Alberta and may allow companies more money if they increase their R&D spending.
This is exciting news for Alberta. The loss of provincial SR&ED ITCs was difficult for small businesses and this new program will be helpful to keep them in business. SR&ED ITC rates for all provinces can be found on our page here. As new information is made available on this program we will update our readers.