The British Columbia SR&ED Tax Credit Program came into effect on September 1, 1999. SRED BC provides tax credits to qualifying corporations that carry on qualifying R&D activities in British Columbia. BC’s SRED program is relatively new compared to the federal SR&ED program which had been established 13 years prior in 1986. When it was introduced, the BC investment tax credit was 10% for CCPCs for up to $2M in qualifying expenditures. This expenditure limit was increased 50% in 2008 to a $3M of qualifying payroll, material, and subcontract costs. This increase brought BC’s expenditure limit in line with the federal expenditure limit. BC is one of the best provinces for SRED in Canada. Directionally, Ontario’s SR&ED credits are going in the wrong direction, from 10% to 8% for CCPCs in 2016.

SRED BC ITCs are also available to non-CCPC corporations in BC such as public firms and foreign-controlled corporations. These credits are awarded at 10% of expenditures, but the credits awarded are non-refundable. Non-refundable tax credits must be applied against BC corporate tax balances to turn them into cash. The credits can be used against tax balances in the current tax year or the 3 prior tax years. If there are no tax balances available to turn the credits into cash, they can be carried forward for 10 years. These rules are like the rules for federal non-refundable credits except those can be carried forward for 20 years. BC is a favorable jurisdiction for public company SR&ED vs Ontario. BC’s 10% credits stack up against a 3.5% credit available to public companies in Ontario called the ORDTC. Both the BC and ON credits are non-refundable.

BC Investment tax credits are defined in section 97 of the British Columbia Income Tax Act. BC ITCs are fully administered by the CRA since SR&ED harmonization so there’s no BC provincial contacts for questions about the program or how it works. As per the legislation, BC SRED credits run from 1999 to September 1, 2022. Hopefully, BC SRED credits will be extended before this deadline, otherwise BC will follow Alberta in going through a period where there are no provincial SRED credits awarded. This occurred in Alberta for the entirety of 2020. Qualifying expenditures once again count toward SRED in Alberta for expenditures after January 1, 2021, but the SRED hiatus means Alberta companies will lose between 12 months (December 31 YE firms) to 23 months (January 31 firms) of provincial SRED credits.