Canadian Territory SR&ED Tax Credits
Receive Retroactive Research Tax Credits on R&D Projects.
Businesses located in each Canadian territory are eligible for the federal Scientific Research and Experimental Development (SR&ED) tax credit program. This page covers the territorial variants of the SR&ED program.
Currently, only the Yukon has its own variant of the SR&ED funding program, which can be stacked with the federal variant of SR&ED. This program is called the Yukon Research and Development Tax Credit. Currently, there currently is not a territorial SR&ED variant for the Northwest Territories, or Nunavut.
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Tax Credit Amount
Yukon (YT): Yukon offers a 15% refundable tax credit; an additional 5% is available on payments made or payable to the Yukon University.
Eligible Applicants
Corporations with a permanent establishment in Yukon and performing SR&ED in Yukon.
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Tax Credit Amount
The Yukon Research and Development Tax Credit provides eligible corporations with a 15% refundable territorial tax credit on qualifying Scientific Research and Experimental Development (SR&ED) expenditures incurred within Yukon.
In addition to the standard credit, corporations may claim an additional 5% refundable tax credit on eligible payments made or payable to Yukon University for qualifying research and development activities.
The Yukon SR&ED tax credit can be combined with the federal SR&ED program, allowing businesses to significantly reduce the cost of conducting research, product development, process improvements, and technological innovation projects.
Because the credit is refundable, eligible corporations may receive a cash refund even if they do not owe territorial income tax.
The amount of funding available depends on:
- The total eligible SR&ED expenditures incurred during the taxation year
- The location where the research and development work is performed
- The corporation’s permanent establishment status in Yukon
- Eligible payments made to Yukon University
- Federal and territorial SR&ED eligibility requirements
Businesses should maintain detailed technical and financial documentation to support their SR&ED claims.
Eligible Applicants
The Yukon Research and Development Tax Credit is available to corporations carrying out eligible SR&ED activities within Yukon.
To qualify, applicants must generally:
- Be a taxable corporation
- Have a permanent establishment in Yukon during the taxation year
- Conduct eligible SR&ED activities within Yukon
- Claim eligible expenditures under the federal SR&ED program
Eligible applicants may include:
- Canadian-controlled private corporations (CCPCs)
- Public corporations
- Foreign-owned corporations with Yukon operations
- Subsidiaries conducting research and development activities in Yukon
Businesses operating in a variety of industries may qualify, including:
- Mining and natural resources
- Environmental technologies
- Manufacturing
- Software and information technology
- Clean technology
- Agriculture and agri-food
- Engineering and industrial development
Corporations must first establish eligibility under the federal SR&ED program, as the Yukon credit is based on qualifying SR&ED expenditures claimed federally.
Eligible Expenditures
The Yukon Research and Development Tax Credit generally follows the federal SR&ED program’s definition of eligible expenditures.
Eligible expenditures may include:
- Salaries and wages for employees directly engaged in SR&ED work
- Materials consumed or transformed during research activities
- Payments to eligible contractors performing SR&ED work
- Payments to approved research organizations and institutions
- Overhead and supporting expenditures calculated under federal SR&ED rules
- Eligible payments made or payable to Yukon University
To qualify, expenditures must relate to activities intended to achieve technological advancement through:
- Basic research
- Applied research
- Experimental development
- Systematic investigation or experimentation
Common qualifying activities include:
- Developing new products
- Improving existing technologies
- Creating new manufacturing processes
- Advancing software functionality
- Resolving technological uncertainties
- Testing and prototyping innovative solutions
All eligible work must be performed in accordance with federal SR&ED requirements and carried out within Yukon to qualify for the territorial credit.
Program Deadline
The Yukon Research and Development Tax Credit is claimed as part of a corporation’s annual income tax filing and follows the same filing timeline as the federal SR&ED program.
Corporations must submit their SR&ED claim within 18 months of the end of the taxation year in which the eligible expenditures were incurred.
For example:
- A corporation with a December 31 year-end must generally file its SR&ED claim by June 30 of the second following year.
- A corporation with a June 30 year-end must generally file its SR&ED claim by December 31 of the following year.
Because claims submitted after the deadline are typically not accepted, businesses should begin preparing technical and financial documentation well before their filing deadline.
Organizations should maintain:
- Project records and technical documentation
- Employee time tracking records
- Contractor agreements
- Financial statements and supporting invoices
- Evidence of technological advancement and experimentation
Working with experienced SR&ED advisors can help ensure claims are submitted accurately and on time while maximizing available federal and territorial tax credits.
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