November 29, 2007 10:19 ET

Eighty-Six Percent of Companies Say an Increased Tax Incentive Would Stimulate More R&D in Canada, a KPMG Study Reveals

TORONTO, ONTARIO--(Marketwire - Nov. 29, 2007) -

Attention: Business and Assignment Editors

Eighty-six percent of respondents to a survey by KPMG LLP say that increased Scientific Research and Experimental Development (SR&ED) tax incentives would influence their company's decisions regarding supporting further Research and Development (R&D) investments in Canada.

Yet, on the other hand, 36 percent stated that the availability of R&D tax incentives does not factor into the decision making process when selecting a geographic location for their R&D activity.

KPMG is submitting its survey findings in advance of the November 30th, 2007, deadline for organizations to submit comments to the Department of Finance and the Canada Revenue Agency on how to make Canada's R&D tax incentive program more effective.

KPMG suggests that a lack of certainty in outcome and a lack of knowledge, experience and understanding are key factors in why the SR&ED tax incentive is not more top of mind for some Canadian businesses. As well, some have tried to use the program before, have become frustrated with the process, and just can't be bothered to factor it into their decision making process.

"Canadian companies are telling us they think the R&D tax incentive program is a positive one for R&D in Canada," said Alan Katiya, FCA, National Leader and Partner, KPMG's SR&ED Tax Services Group. "However, there is room for improvement in the process; the program needs to be administered in a more effective way to ensure that companies are able to access the benefits available to them."

Improving the R&D program is not just about providing more money to organizations-it is also about making the process more relevant to more organizations. When making their investment decisions, organizations are putting more emphasis on the availability of qualified labour (84 percent), corporate tax rates (69 percent), and labour rates (66 percent).

"Relative to any other country in the world, this program is generous and already very lucrative for Canadian businesses," said David Regan, CA, Partner-in-Charge of KPMG's SR&ED Tax Services Group in Toronto. "But a greater focus needs to be put on making the program more accessible to companies so they are more likely to use the incentives."

KPMG commissioned the survey between November 5th and 26th, 2007, and received 345 respondents, with 67 percent having spent more than 100 hours involved in the R&D tax incentive program. Members of more than 20 trade organizations participated in the survey.

About KPMG in Canada

KPMG LLP, a Canadian limited liability partnership established under the laws of Ontario, is the Canadian member firm affiliated with KPMG International, a global network of professional firms providing Audit, Tax, and Advisory services. Member firms operate in 148 countries and have more than 113,000 professionals working around the world.

The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. Each KPMG firm is a legally distinct and separate entity, and describes itself as such.

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