The Alberta Innovation Employment Grant, explained

Despite the name, the Innovation Employment Grant is not something you apply for. It is a refundable tax credit, claimed on your Alberta corporate tax return (the AT1) on a schedule called Schedule 29. If your corporation has a permanent establishment in Alberta and does SR&ED work here, it sits on top of the federal credit — and because it is refundable, it comes back as cash even in a year with no tax to pay.

Who gets it

A corporation that files an AT1, has a permanent establishment in Alberta, and has federal SR&ED expenditures for work actually carried out in Alberta. There is no application and no approval step: you claim it on the return, and Alberta Tax and Revenue Administration (TRA) assesses it.

What counts as an eligible expenditure

Start from the federal figure — your qualified SR&ED expenditures on Form T661 — and take the Alberta share of it: the salaries, materials and contracts for work done in Alberta. Two adjustments then apply:

• If you used the proxy method federally, the federal proxy amount is swapped for an Alberta proxy of the same size: 55% of the Alberta SR&ED salaries. For a single-province claim this is a wash.
• Capital equipment bought after December 15, 2024 counts federally but not in Alberta, so it comes out.

Any other government assistance for the same work reduces the figure first. The grant itself does not: it is worked out on the figure before the IEG is deducted, and then the federal claim is restated net of it.

The two parts

Part I is 8% of eligible expenditures, up to a maximum of $4M of expenditures a year. A short tax year gets a prorated limit, and associated corporations share one limit between them.

Part II is a further 12% on the amount by which this year's eligible expenditures exceed your base amount — the average of your Alberta eligible expenditures for the two previous tax years. It rewards growth in R&D spending. A first-time claimant has a base amount of zero, so the 12% applies to everything under the limit. The base amount is still measured against the $4M cap, not the raw spend.

The taxable-capital phase-out

The credit is reduced once the corporation's taxable capital employed in Canada for the previous year — the whole associated group's, if there is one — passes $10M, and it is gone entirely at $50M. In between, the reduction is a straight line: at $12M of taxable capital, 95% of the credit survives. The figure comes from Schedule 33 of the previous year's T2.

The deadline

Schedule 29 must be received by TRA within 15 months after the AT1 is due, and the AT1 is due 6 months after year end — so 21 months after the end of the tax year. Received, not postmarked. Miss it and the grant is not available for that year. The federal deadline is different (18 months), and an Alberta claim routinely has one window open while the other has closed; the deadlines page sets them side by side.

It reduces the federal claim

The IEG is provincial assistance, and federal rules treat assistance as reducing the expenditures it was paid for. So the federal credit is calculated on your qualified expenditures minus the IEG. Alberta's guide handles this with a two-step method: work out the IEG on the gross federal figure, then restate the federal lines net of it. The net result is what both examples below show.

Example 1, from Alberta's guide

A CCPC with a December 31 year end, not associated with any other corporation, using the proxy method. Federal qualified SR&ED expenditures of $1,000,000, of which $400,000 is Alberta work and the rest Ontario. Alberta SR&ED salaries of $100,000. Alberta eligible expenditures in the two previous years of $300,000 and $0. Taxable capital of $5,000,000, so no phase-out.

This is how SREDDY's engine gets there — the same derivation it attaches to a real claim:

1. AT4970: col105 (AB current-expenditure portion) $400,000; col107 $600,000; col109 (AB salary base) $100,000; col111 (federal PPA in AB) $55,000; col113 (Alberta proxy = 55% × col109) $55,000
2. Line 031 = 005($400,000) − 007($55,000) + 009($55,000) + 011(0) + 025($0) = $400,000
3. Line 108 (max expenditure limit) = $4,000,000 × 365/365 = $4,000,000
4. Line 110 (Part I) = 8% × min(031, 108) = 8% × $400,000 = $32,000
5. Base amount (118) = avg(prior1 $300,000, prior2 $0) = $150,000; Line 112 (Part II) = 12% × max(min(031,108) − 118, 0) = 12% × $250,000 = $30,000
6. Grind (128) = 1 (taxable capital ≤ $10M)
7. Line 130 (IEG before recapture) = (110 + 112) × grind = $62,000; Net IEG (134) = $62,000
8. Step 2 check: 005 becomes $338,000 (net of IEG) and 011 adds back $62,000 → 031 unchanged at $400,000. Fixed point confirmed.

The federal side is then restated net of the grant: $1,000,000 less $62,000 is $938,000 of qualified expenditures, which at the 35% enhanced rate is a federal credit of $328,300. Combined, the claim is worth $390,300. The federal rates page shows that half.

Example 2: growth is smaller, taxable capital is higher

Same corporation, but the previous two years' Alberta expenditures were $300,000 and $200,000, and taxable capital was $12,000,000. The base amount rises to $250,000, so less of this year's spend counts as growth, and the phase-out takes 5% off the top.

1. AT4970: col105 (AB current-expenditure portion) $400,000; col107 $600,000; col109 (AB salary base) $100,000; col111 (federal PPA in AB) $55,000; col113 (Alberta proxy = 55% × col109) $55,000
2. Line 031 = 005($400,000) − 007($55,000) + 009($55,000) + 011(0) + 025($0) = $400,000
3. Line 108 (max expenditure limit) = $4,000,000 × 365/365 = $4,000,000
4. Line 110 (Part I) = 8% × min(031, 108) = 8% × $400,000 = $32,000
5. Base amount (118) = avg(prior1 $300,000, prior2 $200,000) = $250,000; Line 112 (Part II) = 12% × max(min(031,108) − 118, 0) = 12% × $150,000 = $18,000
6. Grind (128) = ($40M − (TC $12,000,000 − $10M)) / $40M = 0.9500
7. Line 130 (IEG before recapture) = (110 + 112) × grind = $47,500; Net IEG (134) = $47,500
8. Step 2 check: 005 becomes $352,500 (net of IEG) and 011 adds back $47,500 → 031 unchanged at $400,000. Fixed point confirmed.

What SREDDY does with this

Every one of those lines is produced by the server, not by the AI you talk to, and each one is kept with the claim so your accountant can trace any figure on Schedule 29 back to the file it came from. Association, short years, capital and other assistance are all handled the same way — and where the engine cannot compute something honestly, such as an associated group's allocation, it says so instead of guessing.