Net After-Tax Cost of Performing Research and Development  /  93

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 large corporations 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

• Elimination of federal ITC on SR&ED capital property (including the right to use such

property) after 2013.

(2)  If the corporation is eligible to claim the Ontario Business Research Institute Tax Credit the 

net after-tax cost would be $456.

(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

(131)

(218)

(218)

—

(218)

Federal ITC @ 20%

(264)

(246)

(246)

(290)

(246)

Federal tax deduction

605

536

536

710

536

Federal taxes saved

$    91

$    80

$    80

$   107

$    80

Provincial tax savings

R&D expenditures

$1,000

$1,000

$1,000

$1,000

$1,000

Federal ITC 

(264)

(246)

(246)

(290)

(246)

Provincial ITC

(131)

(218)

(218)

—

(218)

Provincial tax deduction

605

536

536

710

536

Provincial taxes saved

$    88

$    54

$    86

$    114

$    75

Total tax savings

Federal tax savings

$   355

$   326

$   326

$   397

$   326

Provincial tax savings

219

272

304

114

293

Total savings

$   574

$   598

$   630

$   511

$   619

Net after-tax cost of R&D$   426

$   402

$   370

$   489

$   38

Current as of June 30, 2013

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