Net After-Tax Cost of Performing Research and Development  /  91

Notes, continued

 

The 2012 federal budget introduced the following changes to the federal scientific research 

and experimental development (SR&ED) Program, which, if enacted, will reduce the 

”federal tax savings” and increase the “net after-tax cost of R&D” amounts indicated 

above:

• Reduction of the ITC rate earned by CCPCs on expenditures in excess of the

expenditure limit to 15% (from 20%) for taxation years ending after 2013

• Reduction of the eligible amount of expenditures for SR&ED performed by contractors

to 80% (from 100%) for expenditures incurred after 2012

• Reduction of the prescribed proxy rate to 60% (from 65%) on January 1, 2013, with a

further reduction to 55% on January 1, 2014.

(2)  If the CCPC is also eligible to claim the Ontario Business Research Institute Tax Credit,  

the net after-tax cost would be $281.

(3)  In calculating the net after-tax cost of R&D in Québec, the provincial ITC (the R&D Wage 

Tax Credit) previously did not reduce the amount of expenditures qualifying for the 

provincial R&D deduction.  However, the 2013 Québec budget (delivered on November 

20, 2012) announced that the R&D Wage Tax Credit earned on expenditures incurred after 

November 20, 2012 will need to be included in income.

For additional information on available R&D investment tax credits, and other government 

assistance programs, visit www.thefundingportal.com.

 

Qué.

3

N.B.

N.S.

P.E.I.

Nfld.

Federal tax savings

R&D expenditures

$1,000

$1,000

$1,000

$1,000

$1,000

Provincial ITC

(281)

(218)

(218)

—

(218)

Federal ITC @ 35%

(409)

(431)

(431)

(508)

(431)

Federal tax deduction

310

351

351

492

351

Federal taxes saved

$    34

$    39

$    39

$    54

$    39

Provincial tax savings

R&D expenditures

$1,000

$1,000

$1,000

$1,000

$1,000

Federal ITC 

(409)

(431)

(431)

(508)

(431)

Provincial ITC

(281)

(218)

(218)

—

(218)

Provincial tax deduction

310

351

351

492

351

Provincial taxes saved

$    47

$    16

$    12

$      5

$    14

Total tax savings

Federal tax savings

$   443

$   470

$   470

$   562

$   470

Provincial tax savings

 328

234

230

5

232

Total savings

$   771

$   704

$   700

$   567

$   702

Net after-tax cost of R&D$   229

$   296

$   300

$   433

$   298 

Current as of June 30, 2013

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