Posts Tagged ‘Canadian economy’

R&D Across Canada: 10 Quick Facts

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

Update of Federal Economic and Fiscal Projections

On Friday November 20, 2015, Federal Finance Minister Bill Morneau released an Update of Economic and Fiscal Projections which placed an emphasis on providing a realistic, sustainable, prudent and transparent fiscal management approach.  The 2015 update reassesses the forecasts presented earlier this year in Budget 2015, and effectively reduces the projected budgetary balance by about $6.0 billion per year, on average, resulting in deficits of $3.0 billion in 2015–16 and $3.9 billion in 2016–17, and improving to surpluses of $1.7 billion in 2019–20 and $6.6 billion in 2020–21.

The recent economic and fiscal projections cover national and global GDP activity as well as commodity prices and financial market development, and are detailed below:

Canadian Economy
• Following a significant drop in Canadian business investment, the first half of 2015 saw reduced economic activity with a 0.8% decline in real GDP in the first quarter and a 0.5% decline in the second quarter.
• The decline in economic activity in the first half of 2015 was concentrated in the energy sector, which experienced 17.8% and 12.8% reductions of business investment in the first and second quarters of 2015, respectively, resulting from a significant decline in crude oil prices in mid-2014.
• Additional factors that negatively impacted GDP output in 2015 include weak U.S. economic activity in the first quarter of 2015, reduced consumption and increased global economic uncertainty.
• Output in non-energy sectors maintained growth despite declining overall economic output with a 0.4% and 13.3% growth in real GDP and non-energy merchandise respectively.
• Manufacturing sales and export are expected to continue growing with strong demand from the US and a lower Canadian dollar.
• According to private sector economists, real GDP growth in Canada over the next four years is expected to average 1.9% per year. This represents a 0.2% reduction from the figures projected in Budget 2015.

Global economy
• In 2015, the pace of global economic activity was at its slowest since the global recession in 2009.
• While the U.S. experienced weaker than anticipated growth resulting from the effects of reduced oil prices on capital spending as well as severe winter weather, real GDP growth is expected to pick up by 0.3% in 2016 as compared to 2014.
• Following high financial market volatility during the summer of 2015, global equity markets have somewhat rebounded but continue to demonstrate instability.

Tags: , , ,

Upcoming Canada Logistics Conference

From October 25-27, 2015, the Canada Logistics Conference will be taking place in Niagara Falls, Ontario at the Hilton Hotel & Suites Niagara Falls/Fallsview. Aimed at bringing together supply chain logistics professionals from across the country, this annual thought leadership conference promises to deliver practical ideas and actionable strategies for logistics professionals as we prepare for the 2016 economy.

Hosted by the Canadian Institute of Traffic and Transportation (CITT), the Canada Logistics Conference will provide seven sessions and workshops addressing key topics in the industry, including a spotlight on logistics during the 2015 Pan Am Games held in Ontario. The conference will provide an opportunity for attendees to hear from industry experts and researchers on topics that are important to their businesses, and will also feature networking sessions to facilitate the fostering of new business relationships and critical discussion.

The Canada Logistics Conference will also feature the CITT Gala Awards Dinner, which will recognize individuals and companies for their achievements in relation to CITT Certification and Awards of Excellence. NorthBridge would like to congratulate all award and certification recipients and hopes that all attendees will find the conference productive and informative!

Tags: , , ,

Summary of Provincial and Territorial R&D Tax Credits

The Canada Revenue Agency has recently released the most current summary of provincial and territorial R&D tax credits. Recent program developments by region include:

Manitoba

  • As of January 1, 2014, the definition of ‘eligible expenditures’ has been amended in line with the federal reduction in the prescribed proxy amount to 55%, and the reduction to 80% for contract payments (except contract payments to eligible educational institutions in Manitoba); however, despite the elimination of capital expenditures from the federal tax credit, these costs remain eligible under the Manitoba tax credit.
  • Currently, non-refundable tax credits can be carried back 3 years. Non-refundable tax credits can be carried forward 10 years for tax years ended after 2003 or 7 years for tax years ended before 2004 and applied against the Manitoba income taxes payable. The Manitoba 2015-2016 Budget and Bill 36 propose to extend the carry forward period for non-refundable tax credits to 20 years for tax years ended after 2005.

Saskatchewan

  • The Saskatchewan non-refundable R&D tax credit rate was reduced from 15% to 10% for all eligible expenditures after March 31, 2015.

British Columbia

  • Credit has been extended three years to September 1, 2017.

Quebec

  • As per Quebec’s 2014 budget, all R&D tax credit rates were reduced by 20% for all eligible expenditures incurred after June 4, 2014.
  • A minimum expenditure threshold has been implemented for fiscal years beginning on or after December 3, 2014. With corporate assets below $50 million in the previous year, the first $50,000 of R&D is excluded from eligibility. This minimum threshold will increase linearly up to $225,000 for corporations with assets of $75 million or more in the previous year.
  • All R&D credits (including pre-competitive research, university and public institute research, and research consortium contributions/ rights) have been standardized with the R&D wage tax credit for fiscal years beginning on or after December 3, 2014 to a base rate of 14% (CCPCs with assets below $50 million will qualify for a rate of 30% on the first $3 million of eligible expenditures).
  • In line with amendments to the federal SR&ED tax credit, capital expenditures incurred after 2013 are not eligible. In addition, claims filed after 2013 will be subject to a $1,000 penalty for missing, incomplete, or inaccurate information.
  • As of June 4, 2014, the 10% increase in the R&D wage tax credit for biopharmaceutical corporations is eliminated (previously qualified corporations will continue to receive the benefit at a decreased rate of 8%)

 

The following table provides a breakdown of provincial R&D tax credits as of June 30, 2015.

 

Province/ Program Rate Deadline
Newfoundland and Labrador 15% refundable 12 months after year end
Nova Scotia 15% refundable 18 months after year end
New Brunswick 15% refundable (expenditures incurred after 2003)10% non-refundable (expenditures incurred before 2003) N/A
Manitoba 20% non-refundable (expenditures incurred after March 8, 2005)15% non-refundable (expenditures incurred before March 9, 2005); however, the 2010 Budget extended refundability of the Manitoba R&D tax credit to one-half of eligible expenditures for in-house R&D expenditures not undertaken by an institute in Manitoba and incurred after 2012) 12 months after year end
Saskatchewan 10% non refundable (expenditures after March 31, 2015)15% refundable for all eligible expenditures occurring between March 19, 2009 and March 31, 2012 N/A
Alberta 10% refundable (on up to $4 million in eligible expenses) 15 months after year end
British Columbia 10% non-refundable; refundable for CCPCs up to 10% of the expenditure limit 18 months after year end
Yukon 15% refundable 12 months after year end
Ontario Innovation Tax Credit (OITC) 10% refundable (annual expenditure limit of $3M: Phased out if taxable paid-up capital (PUC) for previous year exceeds $25M or is between $500,000 to $800,000; expenditure limit is eliminated when PUC reaches $50M) N/A
Ontario Business-Research Institute Tax Credit (OBRITC) 20% refundable (qualified expenditures are capped at $20 million annually among associated group of corporations) N/A
Ontario Research and Development Tax Credit (ORDTC) 4.5% non-refundable N/A
Quebec
R&D Wage tax credit; Tax credit on fees paid to a research consortium; Precompetitive tax credits
14% to 30% (after June 4, 2014)17.5% to 37.5% for costs incurred between April 22, 2005 to June 4, 2014  N/A

 

Job Creation A Priority for All Ontario Electoral Candidates

Wednesday marks the beginning of the 2014 Ontario election campaign as Lieutenant Governor David Onley signed the official election writs.  Although all of the candidates began campaigning when NDP leader Andrea Horwath announced she would not support the proposed provincial budget, this signing was necessary to formally complete the process. The party leaders wasted no time beginning their tours of the province, and already one thing has become abundantly clear: no matter the outcome of this election, job creation will be a top priority.

Finance Minister Charles Sousa tabled the proposed provincial budget last Thursday. Among the initiatives listed in the budget was a $2.5 billion “Jobs and Prosperity Fund” aimed at supporting job creation across the country. Despite both the NDP and Conservatives’ lack of support for the budget, it appears that Wynne’s opponents share similar views on job creation.

Progressive Conservative leader Tim Hudak was quoted today as saying that his campaign will centre on “laying out in detail how [his] plan is going to work to get people back to work.”  Similarly, Andrea Horwath of the New Democrat Party has placed jobs and affordability for families at the core of her campaign.  Horwath announced that, if elected, the NDP will implement a Job Creation Tax Credit program to offer incentive to businesses to create jobs at home.  During a visit to Niagara Falls, Horwath noted her increasing concern for high rates of unemployment in Ontario, indicating her commitment to working with “the real job creators” to address the problem.  The new initiative, if implemented, will cover 10% of a new hire’s salary to a maximum of $5000 per job.

It appears that even the most divided of electoral candidates can agree that jobs must be a provincial priority.  We may be able to look forward to some serious investment in job creation very soon.

Tags: , , , , , ,

  • Subscribe to our feed
  • NorthBridge Consultants' Government Funding Blog is dedicated to bringing businesses news and information to help them identify and access the most appropriate government funding programs.

    We offer opinions and insider information that can provide a pulse on government initiatives, the health of the Canadian economy, and firsthand thoughts from Canadian business owners.

Most Recent Entries

Upcoming Events