Department of Finance

Department Overview

Research & Development Tax Credit

Introduction

The Yukon Research and Development Tax Credit is a refundable corporate and personal income tax credit of 15% or 20% (Item H) for eligible expenditures incurred by a corporation after June 30, 2000 or by an individual after December 31, 2000.

This program is administered by the Government of Yukon's Department of Finance and Revenue Canada.

Eligibility

Individuals and corporations are eligible. Individuals must be resident in the Yukon on the last day of the taxation year for which the credit is being claimed. Corporations must have maintained a permanent establishment in the Yukon at any time during the taxation year for which the credit is being claimed .

The portion relating to a taxpayer's share of a partnership's tax credit or trust's tax credit is also claimable by the eligible taxpayer.

Corporations exempt from tax payable under section 7 of the Yukon Income Tax Act or that are controlled by one or more persons who are exempt from tax payable under section 7 of the Yukon Income Tax Act are not eligible to apply.

Eligible Expenditures

An eligible expenditure is one that meets the definition of a "qualified expenditure" under subsection 127 (9) of the federal Income Tax Act.

Eligible research and development expenses are expenses incurred by the taxpayer in respect of a "\"systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis".

Scientific research can take the form of basic or applied research undertaken "for the advancement of scientific knowledge" or experimental development "for the purpose of creating new or improving existing materials, devices, products, and processes".

Further information about eligible expenditures can be found in Interpretation Bulletin IT-151 R5 available on Canada Customs and Revenue Agency's web site at http://www.ccra-adrc.gc.ca/.

Ineligible Expenditures

The Yukon R&D Tax Credit is meant to encourage the advancement of technology. As such, the following are examples of ineligible expenditure:

  • market research or sales promotion
  • quality control or routine testing of materials
  • devices, products or processes
  • research in the social sciences or the humanities
  • style changes
  • routine data collection

Location of Expenditures

Research and development activity must be located within the Yukon to be eligible expenses for the Yukon R&D Tax Credit.

Permanent Establishment

Corporations must be subject to Yukon income tax for the taxation year in which the Yukon R&D Tax Credit is claimed. This requires that a corporation maintained a permanent establishment in the Yukon at some time during the taxation year to be eligible to apply for the credit. Further information regarding the definition of permanent establishment may be found in Interpretation Bulletin IT -177R2 available from any Canada Customs and Revenue Agency Office or at http://www.ccra-adrc.gc.ca/.

Claiming a Credit

Eligible taxpayers may claim the credit by completing a prescribed form and filing it with their T -1 Individual or T -2 Corporate Income Tax Returns. Individuals file a T1232 and corporations file a SCH 442. Copies of these two forms are attached and are available either from your local district taxation office or at www .ccra-adrc.gc.ca. The credit must be claimed within 12 months after the taxpayer's filing due date for the taxation year in which the expenditures were incurred.

The Yukon R&D Tax Credit is refundable to the extent it exceeds a taxpayer's income tax payable. Refunds will be made in the form of a cheque and will be paid upon assessment of the taxpayer's income tax return.

Yukon College

The Yukon R&D Tax Credit will increase from 15% to 20% for eligible research and development activity contracted with (paid or payable to) the Yukon College by an eligible taxpayer

Disclaimer

This information is intended to provide a plain language explanation of the main features of the Yukon Research and Development Tax Credit.

Readers are advised that the bulletin is not intended to replace the need to consult the relevent legislation. In event of a conflict between the legislation and this web page, the legislation shall prevail.

Research & Development Tax Credit Contact

For information contact:

Yukon Research and Development (R&D) Tax Credit
Department of Finance
Yukon Government
P.O. Box 2703
Whitehorse, Yukon
Y1A 2C6

Telephone: 867-667-5343
Facsimile: 867-393-6217

E-mail: fininfo@gov.yk.ca