Government launches consultations to increase Canadian research and development and intellectual property retention

February 1, 2024

Sector:

Today the federal government has launched consultations on its Scientific Research and Experimental Development (SR&ED) tax incentive program, with the broader goals to ensure that support effectively benefits Canadians and positions the country as a research and development (R&D) leader.  The consultation will focus on this key R&D tax credit in an effort to better support the growth and success of R&D intensive business and effectively ensure the retention of intellectual property (IP) within Canada.

SR&ED represents Canada’s largest federal program for business R&D. Introduced in 1948, the initiative provides over $3.9 billion (2021) in tax incentives annually to over 22,000 businesses in Canada to encourage Canadian technology companies and foreign owned firms to engage in R&D.

Towards this objective, the Department of Finance is now seeking feedback from all Canadians and stakeholders on how to modernize and improve the SR&ED program and the suitability of adopting a patent box regime by April 15, 2024.  Patent boxes reduce corporate tax rates on profits generated from domestic IP commercialization, and the federal government is considering providing further incentives to companies that develop and retain IP in Canada with reduced corporate tax rates on generated income globally.

I applaud this effort by the Canadian Government.  It is long overdue for an evolution to a more focused approach to government support of IP development and it’s protection, rather that the rigid rules based method the program currently provides.

Additional questions to be addressed by the consultation include: how to improve support for R&D-focused Canadian firms; how to improve SR&ED’s eligibility criteria and overall structure; how it might better complement other R&D support initiatives; and whether there are more effective ways to provide assistance via SR&ED.

The full details of the Department of Finance Canada press release can be found here:

Government launches consultations to increase Canadian research and development and intellectual property retention – Canada.ca

About Kreston

Kreston has a large national presence within Canada, and internationally with Kreston Global, with market-leading full service technical and financial expertise. Our SR&ED and incentives team is comprised of an integrated group of experienced senior industrial engineering specialists and specialized tax accountants to ensure our clients maximize investment tax credit benefits, with a wholistic approach with includes funding opportunities from all sources. Kreston Global is an international advisory and accountancy network whose focus is helping our clients to be successful in every country or market they chose to operate in.

About the Author

Dale is a Partner in the SR&ED and Government Incentives practice and has a background in Finance, an MBA, and has held several Engineering Technology leadership roles in the IT, Telecom, Space, and Manufacturing industries for over 15 years before moving into Technology Consulting with several of the BIG Four tax consulting firms (EY, Deloitte) with clients including several of the largest technology companies in Canada. From there, Dale moved to the mid-market with Leadership roles at Grant Thornton LLP, Baker Tilly Canada, and more recently as National Practice Leader, Senior Director, at RSM Canada LLP, leading the development of the Government Incentives practice areas from zero to a thriving technology base including IT, Life Sciences, Financial and Manufacturing over six years in all of Canada’s major markets. At Kreston GTA LLP, Dale is contributing to the growth of the practice growing the client base in several key industry areas of IT, Artificial Intelligence, Financial, Life Sciences, Robotics, and Semiconductors.