A strong, competitive R&D; infrastructure drives innovation
The Canadian aerospace and defence industry is committed to R&D; and leading edge dual-use technologies in competitive niche product segments.
- Over US$750 million in research and development in 2003 and the Canadian aerospace and defence industry is committed to achieving the goal of US$1 billion by 2010.
- Canada has strong aerospace R&D; capability , with a large pool of scientific and engineering personnel and an extensive infrastructure of laboratories, university centres, and government support programs.
- Canada offers the most favourable R&D; tax treatment among the G-7 ( Table 1):
- Provides a system of tax credits and accelerated tax deductions for a wide range of R&D; expenditures.
- Eligible costs include salaries, overhead, capital equipment, and materials.
- These federal and provincial tax-based incentives permit firms to significantly reduce R&D; costs through direct investments or by subcontracting in Canada.
- A large and growing number of programs and institutions supporting innovation , such as the Institute for Aerospace Research and several defence research establishments.
- Canadian policies and programs support guarantee Canada’s reputation as one of the most innovative countries in the world will be maintained.
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Table 1: Relative Generosity of R&D; Tax Incentives* |
|
Country |
Relative Generosity |
|
Canada |
100 |
|
U.S.A. |
85 |
|
Japan |
84 |
|
U.K. |
80 |
|
France |
77 |
|
Germany |
71 |
|
Italy |
71 |
|
Relative generosity is determined by dividing the after tax cost of performing $1.00 of R&D; by 1 less the corporate tax rate. Results are indexed to the relative generosity of Canada’s system of tax-based support for R&D.; The higher the ratio the more competitive the tax system. Source: Warda, Jacek, Rating Canada’s R&D; Tax Treatment: A 2003 Update, October, 2003, forthcoming for Industry Canada.
*Does not include Ontario’s new Corporate Income Tax Rates |