Alberta supports business research and development through both a refundable tax credit and a provincial innovation funder. The headline credit is the Innovation Employment Grant (IEG): it pays 8% of eligible R&D up to a company's base level and an enhanced 20% on eligible spending above that base, on up to $4,000,000 of qualifying R&D a year. Alongside it, Alberta Innovates is the province's innovation funding agency. The IEG is built on the same expenditures that qualify for the federal SR&ED program, so the two layers are designed to work together. This guide explains how the IEG is calculated, who can claim it, and how Alberta's supports stack with the federal credit.
The Innovation Employment Grant (IEG)
The IEG is Alberta's province-level R&D credit, introduced to support innovation-driven firms. It works on a two-rate structure tied to how much a company is increasing its R&D effort:
- 8% on eligible R&D expenditures up to the company's base level, where the base level is calculated as a two-year average of the company's prior R&D spending; and
- 20% (the enhanced rate) on eligible R&D expenditures above that base level.
This structure rewards companies that grow their R&D over time: maintenance spending earns the base 8%, while incremental spending above the historical average earns the higher 20%. The grant applies to up to $4,000,000 of qualifying R&D expenditures in a year.
Source: alberta.ca — Innovation Employment Grant
Who qualifies, and the taxable-capital phase-out
The IEG is aimed at small and medium-sized businesses, so eligibility tapers as a company grows. The grant is phased out where a corporation's taxable capital is between $10 million and $50 million, and it is not available once taxable capital reaches $50 million or more.
Eligibility is also tied to timing and to the federal program:
- It applies to eligible Alberta expenditures incurred after December 31, 2020.
- It matches the expenditures that are eligible for the federal SR&ED program — so work that qualifies federally is the starting point for what qualifies provincially.
Source: alberta.ca — Innovation Employment Grant
How to claim: Schedule 29 of the AT1
Because Alberta administers its own corporate tax separately from the federal T2, the IEG is claimed on the Alberta AT1 return — specifically on Schedule 29. That means the IEG claim is prepared together with the rest of the AT1, and it draws on the same R&D figures used for the federal SR&ED claim. Preparing the federal SR&ED claim and the Alberta IEG claim in tandem keeps the eligible-expenditure figures consistent across both returns. Our Alberta corporate tax guide explains the AT1 filing obligation in full.
Source: alberta.ca — Innovation Employment Grant
Alberta Innovates
Beyond the tax system, Alberta Innovates is the province's innovation funding agency, supporting research, technology development and commercialization across the Alberta economy. It operates a range of programs that change over time as priorities and budgets shift. Because program openings and criteria are updated periodically, the right approach is to confirm current programs directly with Alberta Innovates rather than relying on a specific program being open at a given moment.
Source: albertainnovates.ca
How the federal and provincial layers stack
For an Alberta R&D company, the supports are designed to be complementary, not alternatives:
- Federal SR&ED provides the 15% basic / 35% enhanced refundable investment tax credit on qualified R&D — see our SR&ED tax credit guide.
- Alberta's IEG adds the 8% / 20% provincial credit on the same eligible-expenditure base, claimed on the AT1.
Because the IEG matches SR&ED-eligible expenditures, a well-documented SR&ED claim does most of the groundwork for the IEG claim too. Getting the eligible-expenditure pool right once therefore feeds both credits.
How RN Canada helps
RN Canada helps Alberta companies coordinate their R&D incentives so the federal SR&ED claim and the provincial Innovation Employment Grant are prepared together, with consistent eligible-expenditure figures across the T2 and the AT1 (including Schedule 29). We track the taxable-capital phase-out so the IEG is preserved where the company still qualifies, and we keep R&D records claim-ready throughout the year. Our bookkeeping and tax filing and budgeting and financial reporting services support both layers. To talk through your R&D incentives, contact us.
This is general information, not personalized tax advice. Speak to us about your specific situation through our contact page.
Frequently asked questions
The Innovation Employment Grant is a refundable Alberta corporate credit that supports research and development. It pays 8% of eligible R&D expenditures up to a company's base level — calculated as a two-year average of prior R&D spending — and an enhanced 20% on eligible spending above that base, on up to $4,000,000 of qualifying R&D in a year. It is claimed on Schedule 29 of the Alberta AT1 return.
The IEG is phased out for corporations with taxable capital between $10 million and $50 million and is unavailable once taxable capital reaches $50 million or more, targeting it at small and medium-sized firms. It applies to eligible Alberta expenditures incurred after December 31, 2020, and matches the expenditures that are eligible for the federal SR&ED program.
Alberta Innovates is the province's innovation funding agency and supports research and technology development across the Alberta economy. Program availability changes over time, so confirm current openings directly with Alberta Innovates before relying on any specific program in your planning.