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8. Focused on Innovation• <strong>Canada</strong> offers one of the most generous R&D tax incentives in the industrialized world which can currently save firms, onaverage, 30 cents on a dollar invested in R&D in <strong>Canada</strong>.• R&D-intensive sectors in <strong>Canada</strong> also enjoy the lowest costs in the G-7, these being 10.7% lower than that in the U.S.• <strong>Canada</strong> is the lowest cost G-7 country in Digital and Research and Development operations.• <strong>Canada</strong> provides a system of tax credits and accelerated tax deductions for a wide-varietyof R&D expenditures. Eligible costs include salaries, overhead, capital equipment, andmaterials. Significantly reduced R&D costs for direct investment and sub-contracting.Relative Generosity ofR&D Tax Treatments*(Index: <strong>Canada</strong> = 100.0)Percentage Cost Advantage (Disadvantage) Relative to the USA…France123.9<strong>Canada</strong>100.0DigitalResearch & DevelopmentJapan85.9151050-5-10-1514.9<strong>Canada</strong>U.K.8.03.8FranceU.S.0.0-1.0GermanyItaly-4.3Japan-14.9151050-5-10-15-20-2510.7<strong>Canada</strong>9.1FranceU.K.5.2Germany0.4 0.0U.S.Italy-1.1Japan-24.9U.K.U.S.ItalyGermany80.677.076.184.050 60 70 80 90 100 110 120 130Source (Above chart and last stat): Warda, Jacek,Innovation: Measuring <strong>Canada</strong>'s R&D Tax Incentives:May 22, 2009. Data unchanged as of January 2012.Note: Relative generosity is determined by dividing theafter tax cost of performing $1.00 of R&D by 1 less thecorporate tax rate. Results are indexed to the relativegenerosity of <strong>Canada</strong>'s system of tax-based support forR&D. The higher the ratio the more competitive the taxsystem. Calculations based on large firmsSource (Charts and above data): KPMG Competitive Alternatives 201212
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