The Canadian federal government has initiated consultations on the Scientific Research and Experimental Development (SR&ED) tax incentive program. Aimed at modernizing the key R&D tax credit, the focus is on enhancing IP creation and retention in Canada.
The Department of Finance is exploring cost-neutral ways to revamp SR&ED, including a potential patent box regime, which may offer tax breaks for firms developing and retaining IP in Canada on global sales. The consultation, announced in Budget 2022, seeks to evaluate the program’s effectiveness and consider new strategies to support IP development.
With over $3.5 billion provided annually in tax incentives, SR&ED is a cornerstone of Canada’s innovation strategy, despite challenges in implementing broader innovation goals. Stakeholders like CCI suggest broadening eligible expenditures and streamlining the application process to foster better economic growth and innovation.
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