Entrepreneurship, Training and Trade
R & D: After Tax Cost of Research & Development in Manitoba
Over the years, studies by various agencies have repeatedly confirmed that Canada’s income tax treatment of research is among the most generous in the world, especially when coupled with provincial incentives.
In 2009, after considering both the federal SR&ED tax credit and Manitoba’s provincial R&D tax credit, the after-tax cost of one dollar of R&D expenditure in Manitoba is between 44¢ and 46¢, depending on the size of the firm. The following table shows the after-tax cost associated with R&D current expenses for a large corporation and a small privately owned corporation, based on 2009 income tax rates.
After-Tax Cost of C$100 R&D Expenditures in Manitoba, 2009
|
Large Corporation |
Small Private Corporation |
Eligible R&D expenditure |
$100.00 |
$100.00 |
(less) Manitoba tax credit |
(20.00) |
(20.00) |
(less) Federal tax credit |
(16.00) |
(28.00) |
Tax deductible amount |
$64.00 |
$52.00 |
|
|
|
Income Tax Savings |
|
|
Manitoba 1 |
$7.68 |
$0.52 |
Federal 2 |
$12.16 |
$5.72 |
Net after-tax cost |
$44.16 |
$45.76 |
1. Tax deductible amount x provincial corporate income tax rate (12% general rate, 1% small business rate)
2. Tax deductible amount x federal corporate income tax rate (19% general rate, 11% small business rate)
Source: 2009 Manitoba Budget Papers
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