Alberta Announces Attractive 20% R&D Grant to Boost Tech Sector
On July 22, 2020, the Alberta government announced it will implement a strategic program to attract investment to Alberta’s Tech sector. Alongside the lowest corporate tax rate in Canada, the newly-announced Innovation Employment Grant (IEG) will offer substantial grants for technology companies and start-ups in the province.
Beginning January 1, 2021, the Innovation Employment Grant program will offer an incremental funding plan for small and medium-sized businesses. Companies who qualify for the grant will receive at least an 8% payment on their base level of R&D spending (calculated over the past two years), with up to a 20% grant towards the firm’s R&D spending above its historic R&D average. Grant funding will begin to be phased out once a company reaches $10 million in taxable capital, with a full phase-out once a company reaches $50 million. Supporting legislation is expected to be introduced in the Fall of 2020.
The IEG announcement is part of the Alberta Recovery Plan. This announcement follows closely on the heels of the announcement to cut the Alberta corporate tax rate from 10% to 8% as of July 1, 2020. In addition, the provincial government will inject another $175 million over three years into the Alberta Enterprise Corporation to expand access to venture capital for early stage and start-up companies.
With the IEG and a low general business tax rate, it is anticipated that Alberta-based Tech firms will have a competitive advantage at each stage in their development.