Yukon businesses and residents participating in research and development (R&D) can benefit from both federal and territorial support through the Scientific Research and Experimental Development (SR&ED) program. The SR&ED tax credit encourages companies to invest in innovative projects that can drive growth and sustainability in the Yukon. The Canada Revenue Agency (CRA) administers the program, offering direct benefits to corporations and individuals residing in Yukon at the end of the tax year.
Understanding the Yukon R&D Tax Credit
In addition to the federal SR&ED program, the Yukon offers its R&D tax credit. Yukon residents and businesses are eligible for a refundable tax credit of 15% on qualifying R&D expenses. For those making contributions to the Yukon College, an additional 5% credit can be claimed, bringing the total potential tax relief to 20% for certain expenditures. One of the distinctions of Yukon’s tax credit from other SR&ED credits it is unavailable for carry back or carry forward. It must be claimed within a year from the date the tax return is due to be filed.
SR&ED Eligibility and Claim Process in Yukon
To qualify for the Yukon SR&ED credit, businesses must undertake activities that meet the criteria for scientific research or experimental development. Eligible expenses may include wages, materials, and overhead related to R&D efforts. The credit is available for corporations resident in Yukon and individuals carrying on eligible business in the territory as of the last day of the taxation year. Importantly, the federal pool of deductible SR&ED credits is reduced by the amount claimed through the Yukon credit, ensuring there is no duplication of benefits.
Key Features of the Yukon SR&ED Tax Credit
The Yukon R&D tax credit has several distinguishing features that make it unique:
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Maximum of 15% refundable credit for qualified R&D expenditure incurred in the taxation year, in addition to 5 % on donations made to Yukon College.
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Deadline to claim: one year after the tax filing due date.
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No carryback or carryforward, meaning credits must be used in the year they are claimed.
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Recapture and renunciation are not required, simplifying the administrative process.
Conclusion: Supporting R&D in Yukon
The Yukon SR&ED tax credit offers critical support for businesses and individuals investing in innovation. Through the provision of responsive tax incentives on the R & D expenses, the program assists firms in Yukon to overcome financial constraints as they progress towards sustainable development. Canadian SR&ED Solutions is here to help navigate the complexities of claiming these credits and ensuring you get the most from your R&D efforts.