British Columbia offers the BC scientific research and experimental development tax credit, administered by the CRA. It is the simplest of the large provincial credits to work with: one rate, a refundable portion for smaller Canadian-controlled corporations that mirrors the federal enhanced credit, and a non-refundable portion for everything else. The base is the federal qualified expenditures for SR&ED carried out in British Columbia, so the provincial claim is built from the same Form T661 workpapers as the federal one.
Overview
| Item | BC scientific research and experimental development tax credit |
|---|---|
| Rate | 10% of SR&ED qualified BC expenditure |
| Refundable portion | For CCPCs, and, as announced in BC Budget 2026 (17 February 2026), for eligible Canadian public corporations for tax years beginning on or after 16 December 2024, 10% of the lesser of the qualified BC expenditure and the expenditure limit |
| Non-refundable portion | 10% of the remaining qualified BC expenditure, and of all of it for other qualifying corporations; carried back 3 years or forward 10 years |
| Expenditure limit | C$6 million, reduced where prior-year taxable capital exceeds C$15 million and eliminated at C$75 million, for tax years beginning on or after 16 December 2024, as announced in BC Budget 2026 (17 February 2026) |
| Who can claim | A qualifying corporation with a permanent establishment in British Columbia |
| Base and federal link | Federal qualified expenditures for SR&ED carried out in British Columbia |
| How it is claimed | The credit is claimed on Form T666 filed with the T2 return. |
| Deadline | No later than 18 months after the end of the tax year |
| Administered by | Canada Revenue Agency, through the T2 return |
Who can claim
The credit is for corporations with a permanent establishment in British Columbia that carry out SR&ED in the province. The refundable portion is limited to CCPCs and, as announced in BC Budget 2026 (17 February 2026), for tax years beginning on or after 16 December 2024, eligible Canadian public corporations. Other corporations, including foreign-controlled subsidiaries, claim the non-refundable portion against BC tax. A corporation that is a member of a partnership can claim its share of the partnership's credit.
BC Budget 2026 (17 February 2026) announced the removal of the September 2027 expiry, the extension of the refundable credit to eligible Canadian public corporations, the C$6 million expenditure limit with the C$15 million to C$75 million taxable capital phase-out, and restored capital expenditures, all for tax years beginning on or after 16 December 2024.
Rate and calculation
The BC computation follows the federal structure. The expenditure limit of C$6 million a year and its C$15 million to C$75 million taxable capital phase-out, as announced in BC Budget 2026 (17 February 2026), apply for tax years beginning on or after 16 December 2024. Restored capital expenditures were announced in the same budget for the same tax years. The BC credit is then deducted from the federal base, because provincial R&D tax credits are government assistance that reduces the qualified expenditures on which the federal investment tax credit is calculated, under subsection 127(18).
Illustrative example. Fraser Robotics Ltd., a hypothetical CCPC with taxable capital well below C$15 million, has C$1,000,000 of qualified expenditures for SR&ED carried out in British Columbia and no other assistance.
| Step | Amount |
|---|---|
| Qualified BC expenditure | C$1,000,000 |
| BC credit at 10%, refundable (within the C$6 million limit) | C$100,000 |
| Federal qualified expenditures after the BC credit | C$900,000 |
| Federal credit at 35% | C$315,000 |
| Combined credits | C$415,000 |
A foreign-controlled corporation with the same costs would have a BC credit of C$100,000 that is non-refundable, usable only against BC tax, and a federal credit at the basic rate of 15% on the reduced base.
How to claim
- Prepare Form T661 and Schedule 31, recording for each project the costs of work performed in British Columbia.
- Confirm the permanent establishment in British Columbia and, for the refundable portion, the corporation's status and its share of the expenditure limit.
- Complete Form T666 to compute the refundable and non-refundable portions.
- Enter the BC credit as government assistance in the federal calculation and recompute the federal qualified expenditures.
- Carry the amounts to Schedule 5 and file with the T2 return, within 18 months of the end of the tax year.
The 18-month limit lines up with the federal reporting deadline, which is 12 months after the T2 filing due date, itself six months after year end. A late federal claim is usually a late BC claim as well.
Working with the federal claim
Because the BC base is the federal qualified expenditure for work in the province, a CRA review that changes the federal figures changes the BC credit, and the federal credit is then recomputed on the new net amount. Keeping one project list, with the same names and costs on Form T661 and Form T666, means a review outcome flows through both without a separate reconciliation.
The location of the work is what decides the BC share. Employees who split time between offices in different provinces need time records that show where the work was done, and contracts with performers should state where the contractor carried it out.
Common questions
Is the BC credit refundable for every company? No. Only the portion up to the expenditure limit, and only for CCPCs and, as announced in BC Budget 2026 (17 February 2026), eligible Canadian public corporations. Other corporations use it against BC tax and carry it over.
Do we file anything with the Province directly? No. The credit is claimed on Form T666 with the T2 return, which the CRA administers.
Does the BC credit apply to capital expenditures? Yes, for tax years beginning on or after 16 December 2024, as announced in BC Budget 2026 (17 February 2026).
Related pages
Official sources
- Provincial and territorial corporation taxCanada Revenue Agency
- British Columbia scientific research and experimental development tax creditCanada Revenue Agency
- Scientific research and experimental development tax creditGovernment of British Columbia
- B.C. provincial budget tax changesGovernment of British Columbia
- Income Tax Act (British Columbia)BC Laws
- Income Tax Act, subsection 127(18)Justice Laws Website
Educational content only, not tax advice. See the disclaimer.