R&D, design credits/grants around the world

Saw this article pop up on twitter this morning via the @designcanada :

Innovation needed on a flawed R&D incentive scheme


It got me thinking about tax credits and grants that encourage design around the world. I only have a view of Canadian policy, so I’m curious what others do.

Here in Canada, we have federal corporate tax and provincial. On the federal level there is an R&D tax credit of up to 35% of R&D spending up to $3 million and 20% after that amount. R&D for Canada is considered experimental scientific research. Whether it is ever turned into a product is irrelevant. It’s also noteworthy that it doesn’t cover any kind of social or cultural research.

I’ve found it to be difficult to apply in most product development that I’ve been involved in because so much design is just penetrating existing markets. Also, from a design perspective, it’s rare that we have a long elaborate research process.

In the province of Québec, we have a tax credit for industrial design. It permits a deduction on up to $60,000 in industrial design salaries or 65% of fees to an external design consultant. It is only for enterprises with more than $150,000 in revenue.

This one has mixed benefits because it’s so low. It’s more of a foot-in-the-door push for design than something really encouraging growth. Also, it doesn’t increase the competitiveness of design in Québec versus other places. I’m confident that no one outside of the province knows or cares about this. Lastly, it suggests to businesses (that are already fairly conservative) that design isn’t successful, it’s optional.

Remember, ID is specifically NOT included in SR&ED. If it is part of the research, you will need to call it engineering development.


$60K? I’ll take it even if it is “low”.

But, how does it promote less value, in your mind, but it doesn’t not in the case of SR&ED?

IP: I’m actually against corporate taxation in general. In both cases, I think it could give management the impression that these activities are not profitable in their own right. With SR&ED, I feel it’s more developed and understood, therefore, the credits will just be cream on the top of the benefits that already evident. With design, I think it’s just too little to actually move a company to bring design in, but just enough to suggest that design isn’t profitable on its own.

BTW: are you saying grrr because you wish BC was like this, or grrr against it?

Grrrr…wondering why a country works that way. Not particularly “social” for Quebec to be getting benefits the rest of the country doesn’t have access to.

As a business owner, in a taxation state, I am most definitely in support of BC having a credit of this nature.

IP: We live in a highly decentralized federation! What surprises me is that people still argue about how policy changes would ruin economies. Quebec is proof that a highly taxed, highly unionized government doesn’t have big an effect on economic outcomes (perhaps it’s even better here).