Recently, the Thunder Bay Chamber of Commerce and the Kamloops Chamber of Commerce have jointly released a proposed resolution that criticizes the federal government for changes that disadvantage capital-intensive companies, like those in manufacturing, pharma, and biotech. The manufacturing sector has been particularly disadvantaged, due to the exclusion of capital expenditures, reduction in the general rate, and the reduction of the inclusion rate for contractor payments. These changes have largely excluded pilot plants and resource-intensive industrial processes from SR&ED eligibility.
The resolution recommends that the federal government:
- Review the existing legislation to make sure that the changes do not favour labour intensive industries over capital intensive industries.
- Provide government-wide clarity when it comes to innovation. Responsibility should be assigned to a single minister, supported by government and stakeholders working with provincial and territorial governments.
- Eliminate traditional overhead calculation, and reintroduce recognition of capital and leased expenditures and the full value of expenditures eligible for SR&ED deduction and Investment Tax Credits, ultimately achieving the desired “revenue neutral” changes and removing the current bias against capital-intensive research and development.
- Monitor carefully the pilot pre-approval process.
