BC Innovation & SR&ED Tax Credits (2025 Guide)
British Columbia supports business innovation, research, and technology development through a powerful set of provincial tax credits. The BC Scientific Research & Experimental Development (SR&ED) tax credit is fully stackable with the federal SR&ED program, providing significant refundable or non-refundable credits to eligible corporations. In addition, BC offers digital media and interactive tech credits for qualifying companies. This guide explains who is eligible, which expenditures qualify, how to claim, and how to maximize your innovation funding.
BC SR&ED Tax Credit
- What is it? The BC SR&ED tax credit is a 10% credit (as of 2025) on eligible SR&ED expenditures incurred in BC, up to a maximum annual limit.
- Refundability: The credit is refundable for Canadian-Controlled Private Corporations (CCPCs) on the first $3 million of eligible expenditures; non-CCPCs and expenditures above the threshold are non-refundable but can reduce BC income tax payable.
- Stackability: This credit stacks with the federal SR&ED program, allowing claimants to receive provincial and federal benefits on the same expenditures.
- Eligible Activities: Experimental development, applied/advanced research, and support work performed in BC for technological advancement. Activities must meet CRA SR&ED criteria.
- Eligible Expenditures: Salaries/wages, materials, overhead, SR&ED contracts, certain capital expenditures (pre-2014), and prescribed proxy amounts.
- Who Qualifies? Corporations (including CCPCs, foreign subsidiaries, and partnerships with corporate partners) carrying on eligible SR&ED in BC.
- How to Claim: Complete BC Schedule 428 and the federal T661 SR&ED form with your T2 corporate tax return. Claims must be filed within 18 months of year-end.
Tip: Keep detailed technical records, payroll logs, and supporting documentation for all SR&ED projects. Most audits focus on project eligibility, evidence of experimentation, and BC-located work.
Digital Media & Technology Credits
- Interactive Digital Media Tax Credit (IDMTC): A 17.5% refundable credit on eligible BC salary and wages for the creation of interactive digital media products (e.g., video games, educational software, apps).
- Who Qualifies? BC-based corporations whose primary business is digital media production. Must be registered for the credit and maintain eligible BC payroll.
- Claim Process: File the IDMTC Certificate with your T2 and BC returns. See the official IDMTC page for forms and guidance.
- Other Tech Incentives: BC also offers film/TV credits, PST exemptions for R&D equipment, and innovation grants (see our BC Film/Digital Media Credits guide).
Stacking with Federal SR&ED
- You can claim both the federal and BC SR&ED credits on eligible expenditures, maximizing your cash refund or tax reduction.
- Be aware of minor differences in eligible expenditures and documentation requirements between federal and provincial programs.
- Digital media credits may interact with SR&ED; review both sets of rules if your business qualifies for both.
Note: Claim deadlines are strict—generally 18 months after your fiscal year-end. Late claims are disallowed.
BC Innovation & SR&ED: Frequently Asked Questions
Can BC SR&ED credits be claimed by startups?
Yes. Many BC startups, especially in tech, software, and biotech, qualify for both federal and provincial SR&ED. Refundable credits are especially valuable for pre-profit startups.
Can I claim for subcontracted work?
Some expenditures for SR&ED contracts performed in BC may be eligible, though rates and claim rules differ from in-house work. Review both federal and BC eligibility guidelines.
Is documentation important?
Absolutely. Keep time logs, technical reports, payroll records, and evidence of scientific/tech advancement. Both CRA and BC require proof that work occurred in BC and meets SR&ED criteria.
What if my company is not a CCPC?
Non-CCPCs can claim the BC SR&ED, but credits are non-refundable and can only offset BC corporate tax owing. CCPCs benefit from refundability up to the annual threshold.