Canadian High Tech Sector Not Taking Advantage Of R&D Tax Credits

by Mike Godfrey, Tax-News.com, Washington

21 March 2002

A new study released today by international consultancy firm, KPMG, has revealed that a shockingly low number of Canadian high-tech companies are taking advantage of research and development tax credits offered by the federal government.

The poll, which was conducted in Ottowa as part of a nationwide look at the state of the industry, revealed that of those high-tech companies questioned, only around 40% had applied for the credits, which can reduce the cost of $1,000 in research and development to as little as $300, when combined with incentives offered by the provincial authorities.

Speaking prior to the release of the survey, KPMG Partner Ken Charbonneau said: 'We were very surprised, even shocked at the results. This is a terrific source of financing.'

It has been suggested that the wariness and lack of knowledge surrounding the Government incentive is a result of difficulties in obtaining R&D tax credits in the past. 'Many years ago people opted out because their claims were being rejected. That's changed,' explained Charles Murphy, Tax Partner at the consultancy firm, adding that: 'The process has been streamlined.'

Both men admitted that the process of initially applying for the credits can be complicated. However, the benefits of securing such assistance are considerable.

'Companies have to view research and development tax credits as an alternative source of financing rather than a form-filling project,' Mr Charbonneau concluded. 'Executives need to understand the benefits and not get turned off by the comments of some that it's too complex. It doesn't have to be.'

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