Alberta Innovation & R&D Tax Credits (2025)

Alberta businesses investing in innovation and research can benefit from a suite of generous programs and tax incentives. The Alberta Innovation Employment Grant (IEG) is the province's flagship refundable R&D incentive, designed to support SMEs and startups scaling up their innovative work. Stacking opportunities with the federal SR&ED program make Alberta especially attractive for technology, research, and digital firms.

History of Alberta Innovation Tax Credits
Alberta previously offered the Alberta Scientific Research and Experimental Development (ASR&ED) Tax Credit (2009–2020), which was replaced by the Innovation Employment Grant (IEG) from 2021 onward. The IEG is considered one of the most generous refundable R&D credits in Canada, particularly for small/medium-sized businesses. Alberta also offers periodic digital media and export innovation grants. Compared to other provinces, Alberta’s IEG is especially attractive due to its stackability with the federal SR&ED program and its refundability for early-stage companies.

  • Who is eligible? Incorporated businesses operating in Alberta, especially Canadian-Controlled Private Corporations (CCPCs) with eligible R&D or innovation expenditures.
  • Claimable activities: Research and development (R&D), experimental development, new product/process design, software, digital, scientific, and tech innovation projects.
  • Stacking: Most Alberta innovation credits can be claimed in addition to the federal SR&ED tax credit.
alberta tech office||innovation lab||research team#|#Modern Alberta innovation lab or tech office with business team and R&D equipment#|#alberta-innovation-lab.jpg

Key Alberta Innovation & R&D Tax Programs

Innovation Employment Grant (IEG)

  • What is it? Alberta's IEG provides a refundable tax credit of up to 20% on eligible R&D expenditures above a business's base level, and 8% on base-level spending, for a maximum of $4 million in annual qualifying expenses.
  • Eligibility: Alberta-based CCPCs, with qualifying research and development expenditures as defined for federal SR&ED. The company must have a permanent establishment in Alberta throughout the year.
  • Application Deadline: Claim must be filed with your T2 corporate return for the tax year in which the expenses were incurred (generally within 6 months of the fiscal year-end).
  • How to claim: File Alberta Schedule IEG with your T2 return. Prepare supporting documentation (project descriptions, payroll, contracts, etc.).
Claim Calculation Example:
  • Suppose a tech startup's base R&D expenditures (average of previous 2 years) = $200,000.
  • Current year eligible R&D expenditures = $500,000.
  • IEG credit = (8% x $200,000) + (20% x $300,000) = $16,000 + $60,000 = $76,000 refundable credit.

Federal SR&ED Tax Credit (for Alberta Businesses)

  • What is it? The Scientific Research and Experimental Development (SR&ED) program is a federal refundable/ non-refundable tax credit for eligible R&D work. Alberta companies can claim both IEG and SR&ED on the same expenditures.
  • Eligibility: Incorporated businesses with eligible R&D activities as defined under the federal program (see SR&ED Official Guide).
  • Application Deadline: Must claim within 18 months of the end of the tax year in which expenditures were incurred.
  • How to claim: Complete federal T661, T2SCH31, and Alberta IEG schedules in your T2 return. Documentation is essential.
Claim Calculation Example:
  • Eligible Alberta CCPC with $500,000 qualifying R&D. Federal refundable SR&ED = 35% x $500,000 = $175,000.
  • Combined with Alberta IEG from above: Total refundable credits = $76,000 (IEG) + $175,000 (SR&ED) = $251,000.
  • Learn more about SR&ED

    • Other Alberta Innovation Credits & Programs

    • Alberta Digital Media Tax Credit (currently paused, may return): For interactive digital media development, video games, and software. Check Alberta Innovates for updates.
    • Alberta Innovates: Direct grants, vouchers, and advisory services for R&D and commercialization. Application deadlines vary by program, see Alberta Innovates Programs.
    • Alberta Export Expansion Program: Grant funding for companies commercializing new technology internationally. Applications must be submitted pre-project.
    Documentation Tip: Keep detailed project records, timesheets, and technical documentation. CRA and Alberta will request supporting evidence for all claims.

    Step-by-Step Claim Instructions

    1. Assess eligibility: Confirm your business is a CCPC with eligible Alberta-based R&D/innovation projects. (See Alberta IEG official site).
    2. Track all qualifying expenditures and project activities throughout the year.
    3. Calculate your base and incremental R&D expenditures for IEG. For SR&ED, prepare T661 and supporting technical documents.
    4. Prepare and file Alberta IEG schedule (with T2) and federal SR&ED schedules. Attach all supporting documentation.
    5. Retain all supporting documentation for at least 7 years. Respond promptly to any CRA or Alberta audit requests.
    6. Consider consulting a specialized tax professional if your claim is large or complex—especially for multi-year or multi-program claims.

    For more information, visit the official Alberta IEG page or Canada-Wide Business Credits to maximize your refund.

    Common Documentation Mistakes (and How to Avoid Them)

    How to Avoid: Organize your documentation during the year, review CRA/Alberta checklists, and work with a specialized tax advisor if uncertain.

    Case Studies: Maximizing Combined Credits

    Case Study 1: Alberta Tech Startup
    • ABC Tech Inc. (Alberta CCPC, 12 employees) invests $400,000 in eligible R&D. Base R&D from prior years is $150,000.
    • IEG calculation: (8% x $150,000) + (20% x $250,000) = $12,000 + $50,000 = $62,000
    • SR&ED calculation: 35% x $400,000 = $140,000
    • Total refundable credits: $62,000 + $140,000 = $202,000
    • ABC Tech uses both credits to fund further R&D and grow their business.
    Case Study 2: Alberta Manufacturer Expanding Digital Media
    • XYZ Manufacturing (Alberta CCPC) invests $1.2M in developing interactive digital media and qualifies for both federal SR&ED and (when available) Alberta Digital Media Tax Credit.
    • Files all required Alberta and federal schedules, claims full IEG, and splits expenditures properly to maximize their refund.
    Case Study 3: Missing Documentation Penalty
    • DEF Innovations claims IEG and SR&ED but fails to provide supporting project documentation and timesheets. CRA/Alberta audits and denies the claim, causing a significant lost credit.
    • Lesson: Always maintain contemporaneous records and respond promptly to audit requests!

    Related Alberta Business Tax Topics