A recent KPMG study found that 81% would do more research and development if a patent box model existed. Canada investigation
Toronto, April 10, 2024 /CNW/ – The majority of Canadian business leaders believe the federal government should support broader research and development (R&D) activities and provide tax relief on Canadian intellectual property (IP) to help businesses and, by extension, the economy. hope to do it.Increase your productivity and discover KPMG Canada investigation.
As demand for scientific research, experiment and development (SR&ED) programs increases across the country, more than 8 out of 10 leaders (84 percent) wants to simplify and expand its programs to encourage more investment in innovations that create economic prosperity.
”Canada's “Lack of domestic research and development is a major factor behind the country's productivity lag compared to other developed countries.” david durstKPMG, partner in charge of tax benefits Canada. “Canadian businesses face the challenge of turning ideas and innovations into viable and profitable businesses that drive economic growth and improve the standard of living for Canadians. Early-stage research is currently underway. There are tax incentives for development, but extensive support for transition is available.'' Knowledge leading to commercialized patents is missing. Canada's approach. “
Key findings:
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84 percent of 534 small business business leaders nationwide Canada We believe the process of applying for and receiving the SR&ED tax credit needs to be simplified.
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74 percent say the SR&ED tax benefits/rebates are not sufficient to justify the investment
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78 percent It says it will conduct its own research and development if the investment tax credit (ITC) rate is higher than 35%.
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82 percent We believe that SR&ED should be expanded to cover a broader range of activities and costs, such as equipment and commercialization of research, even if the program's ITC is low.
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86 percent Prefer federal policies and tax cuts that support business growth, innovation, and productivity over personal tax credits
SR&ED is the single largest research and development support program. Canadawhich provides an enhanced 35% refundable tax credit for Canadian-controlled private companies upon initial establishment. 3 million dollars Publicly traded and foreign companies eligible for a portion of eligible R&D-related expenses and a 15 percent non-refundable credit for R&D performed during the period. Canada.
The survey found that business leaders believe the current definition of research activities and spending under the SR&ED program is too narrow, covering only scientific research and experimental development. 78 percent acknowledges that the research and development conducted by its operations is not currently subject to SR&ED.
“Business leaders also want more routine research and development that results in productivity gains to be eligible for SR&ED, even if the tax credit rate is low,” Durst added. “The question is whether the federal government's overhaul of innovation programs will support broader research and development. Canada This may not be patentable, but it directly improves business productivity. ”
Support for Canada's patent box system
The Treasury is currently holding a public consultation until the next deadline. April 15th modernize $3.5 billion SR&ED programs on a cost-neutral basis. The Treasury is also seeking public comment on a “patent box” scheme that would provide tax breaks to encourage companies to develop and maintain their intellectual property. Canada.
8/10 (81 percent) leaders say they will do more research and development if the government introduces a patent box model that would result in lower corporate tax rates on profits from Canadian intellectual property.
The government's stated objective in proposing the patent box system is to encourage new and existing Canadian companies to conduct research and development. Canada By providing preferential tax rates on income derived from intellectual property resulting from research and development. In addition to providing direct support for early research and development activities, other countries must ensure that the benefits of locally developed intellectual property remain within their own economies, providing employment and other social and economic benefits. It says it offers incentives to help generate profits. Brian ArnewaneKPMG, Senior Advisor, National Tax Center Canada.
“In general, income tax systems should be neutral in their treatment of business income to avoid distorting the allocation of investment capital and harming competitiveness,” says Arnewein. “However, there are cases where well-designed intellectual property tax incentives apply, under which qualifying income is derived from research and development conducted within the country. Canada. Additional support for research and development here could ease the path to commercialization and reduce the pressure to look externally for patents and other intellectual property. Canada This is because they benefit from lower tax rates in other regions. ”
Learn more about the upcoming federal budget here.
About KPMG Business Research – Union Budget 2024 Edition
At KPMG Canada Survey of 534 Canadian companies From February 3, 2024 to February 27, 2024, using Sago's Methodify online survey platform. All respondents are business owners or C-level decision makers. 31% of leading companies 500 million dollars to 1 billion dollars Total annual income. 14 percent; 300 million dollars to $499 million; 35 percent; 100 million dollars and $299 million; 19 percent; $99 million to 10 million dollars The remaining 1 percent is less than 9 million. 75% of companies are privately held and 25% are publicly traded. 42% are family-owned businesses.
About KPMG Canada
KPMG LLP is a limited partnership, Canadian-owned and operated full-service audit, tax and advisory firm. For more than 150 years, our experts have provided consulting, accounting, auditing and tax services to Canadians, inspiring confidence, inspiring change and driving innovation. KPMG employs more than 10,000 people in more than 40 locations, based on our core values of integrity, excellence, courage and working together for better. Canada, serves private and public sector customers. KPMG is consistently ranked as one of: Canada's We are a top employer and one of the best places to work in the country.
Our firm is established under the following laws: Ontario It is also a member of KPMG's global organization of independent member firms affiliated with KPMG International, a UK company limited by guarantee. Each KPMG company is a legally separate and independent organization and describes itself as such. For more information, visit kpmg.com/ca.
To arrange an interview with a KPMG spokesperson, please contact:
nancy white
National communications and media relations
At KPMG Canada
(416) 777-3306
nancywhite@kpmg.ca
SOURCE KPMG LLP
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