The Ontario Liberal government’s proposed 2013 budget can provide the local technology industry with a much needed boost by increasing tax credits for research and development, according to Deloitte Canada.
“Simply said, we in Ontario are not as productive as our competitors south of the order,” said David Mason, leader of Deloitte Canada’s Ontario private company services tax team. “Ontario needs to improve support for innovation.”
Currently, the province is offering a 10 per cent refundable tax credit for some companies on their first $3 million of scientific research and experimental development (SR&ED) expenditures and provides a 4.5 per cent non-refundable tax credit for all companies.
“The tax credit for SR&ED probably should be higher and refundable to make a better impact,” he said. “More importantly, making the 4.5 per cent tax credit refundable would help companies who can’t benefit from the existing tax credit.”
He also said a tax credit for angel investors, similar to British Columbia’s Equity Capital program can further spur investments in innovative companies.
Among other things, the proposed budget released earlier this month, allocates
- $260 million for youth employment strategy aimed at creating 30,000 jobs over the next two years
- $200 million for the New Advance Manufacturing Fund over five years
- $500 million for creation of the Canada Job Grant
- $20 million for pilot projects over three years to be administered by the Industrial Research Assistance Program (IRAP)
“It’s good that the government is has not pulled back its focus on the information and communication technology sector,” said Karma Gupta, president of the Information Technology Association of Canada (ITAC). “I would like to find out more though how the youth training and entrepreneurship program will be carried out.”
“Last year the focus was in developing STEM (science, technology, engineering and math) skills, I hope we don’t lose that momentum,” he said “I think in this context there wasn’t a lot of new funding.”
He also said the technology industry remain “deeply concerned” with the health of innovation.