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Canada Proposes Improvements To R And D Tax Breaks

by Mike Godfrey, Tax-News.com, Washington

12 October 2007


The Canadian government has launched a consultation on how the scientific research and experimental development (SR and ED) tax incentive program can be made more effective for Canadian business.

“Canada’s tax incentives for research and development are among the most advantageous in the world,” observed Finance Minister Jim Flaherty in announcing the move. “But other countries are not standing still, and neither will we. We want to maximize the efficiency of our R&D incentives for Canadian innovators.”

The SR&ED tax incentive program is the single largest federal program supporting business R&D in Canada, and provided over C$3 billion in tax assistance to Canadian businesses in 2006. The government said that the SR&ED program plays, and will continue to play, a leading role in fostering a competitive and dynamic business environment in Canada.

In undertaking these consultations, the government’s overriding objective is to increase the level of private sector R&D by implementing cost-effective improvements to the tax incentives and further streamlining the program’s administration.

“Our government continues to look for new and innovative ways to improve the administration of the tax system and to reduce the burden on businesses,” stated Gordon O’Connor, Minister of National Revenue. “Private sector R&D is crucial to the long-term growth and prosperity of our economy, and this broad-base consultation process will help us improve our existing programs.”

The government is releasing a consultation paper entitled 'Tax Incentives for Scientific Research and Experimental Development,' which is intended to provide a basis for discussion and stakeholder input on a number of key questions relating to the SR&ED program. The consultations are intended to advance the government’s long-term economic plan, entitled 'Advantage Canada', the goal of which is to improve Canada's business environment to encourage more entrepreneurship and private investment.

Interested parties are being urged to contribute to the consultation by submitting suggestions to the Finance Department by November 30, 2007.


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