Tax Support for R&D and Intellectual Property: Time for Some Bold Moves

Summary:
Page Title:Tax Support for R&D and Intellectual Property: Time for Some Bold Moves – C.D. Howe Institute
Article Title:Tax Support for R&D and Intellectual Property: Time for Some Bold Moves
URL:https://cdhowe.org/publication/tax-support-rd-and-intellectual-property-time-some-bold-moves/
Published Date:July 19, 2022
Accessed Date:February 15, 2025

Ottawa’s Review of the SR&ED Credit Needs Bolder Thinking

  • Ottawa’s review of the Scientific Research and Experimental Development (SR&ED) program is welcome news, but bolder thinking is needed to substantially improve the effectiveness of the tax credit, according to a new report from the C.D. Howe Institute. In “Tax Support for R&D and Intellectual Property: Time for Some Bold Moves,” author John Lester says the review, announced in federal budget 2022, risks being focussed on issues that will have, at best, a minor impact on the net social benefit of the program.
  • The SR&ED investment tax credit is a large program, costing approximately $3.5 billion in 2022. In contrast to government spending programs, which must be evaluated every five years with the results made public, there is no requirement to assess tax-based spending programs. Formal periodic reviews are needed to ensure that taxpayers are getting value for money.
  • The announced review has two general objectives: to assess whether the SR&ED program is effective in encouraging R&D that benefits Canada, and to explore opportunities to modernize and simplify the SR&ED program. The budget announcement included a commitment to assess the merits of implementing a special low rate of taxation on profits from intellectual property (IP), also known as a Patent or IP Box.

Membership Application

Interested in becoming a Member of the C.D. Howe Institute? Please fill out the application form below and our team will be in touch with next steps. Note that Membership is subject to approval.

"*" indicates required fields

Please include a brief description, including why you’d like to become a Member.

Member Login

Not a Member yet? Visit our Membership page to learn more and apply.