1. The Scientific Research and Experimental Development (SR&ED) tax incentive program dates back to as early as 1944, when companies could deduct 100% of eligible expenditures and a third of capital expenditures incurred for scientific research from their taxable income.
2. The Canadian government provides over $20 billion in the form of direct and indirect funding programs each year for increasing innovation and national competitiveness.
3. Canadian expenditure on industrial R&D, expressed as a share of GDP, is relatively low compared to other countries and is predominantly concentrated in several traditionally R&D-intensive industries, including aerospace, pharmaceuticals, information and communication technologies, oil and gas extraction, and scientific research and development services.
4. While several industries are at par with other countries in industrial R&D intensity, such as computer and communications equipment manufacturing, these industries constitute a smaller portion of the Canadian economy, thereby dragging down Canada’s overall industrial R&D intensity compared to other countries, such as the U.S.
5. Despite relatively low industrial R&D expenditures, Canadian firms repeatedly report high levels of innovation compared to other countries.
6. Canada has the 12th highest rate of patents granted in the world and is responsible for 1.1% of patents filed in Europe, Japan, and the United States.
7. Ontario accounts for the largest share of R&D in the ICT sector. Aerospace R&D is concentrated in Quebec, R&D in the oil and gas industry is predominantly concentrated in Alberta, British Columbia, and Atlantic Canada, whereas the majority of pharmaceutical R&D is performed in British Columbia, Ontario, and Quebec.
8. Canadian companies are increasingly combining indirect funding from SR&ED with direct government funding programs, such as grants and loans, for business growth, continuing innovation, and workforce development.
9. Compared to other countries, Canadian industrial R&D is more labour intensive and less capital intensive.
10. Canada has several globally significant clusters of R&D-intensive firms as measured by number of patents granted. There are almost as many patents produced in the GTA as in Vancouver and Montreal combined. Furthermore, the number of patents per capita is highest in Ottawa and Waterloo.
Source: The state of Industrial R&D in Canada. Council of Canadian Academies, 2013