January 17, 1996
(Finance)

Government announces details of the new Scientific Research 
and Experimental Development Tax Credit

Paul Dicks, Q.C., Minister of Finance, announced today the details of the new provincial Scientific Research and Experimental Development Tax Credit. Government's intention to implement the credit was announced in the 1995 Budget with details to be determined through consultation with industry and other interested parties. The consultation process is now complete and government has finalized the credit details.

The new provincial R&D tax credit rate is set at 15 per cent and is fully refundable. The credit will permit businesses undertaking qualifying R&D activities and making qualifying R&D expenditures in the province to reduce their provincial income tax otherwise payable by the amount of the credit. In the case of a business that does not have sufficient tax payable to fully claim an earned credit, the excess credit will be refunded by cash payment to the business.

"The new research and development tax credit is designed both to stimulate additional spending on research and development in the province and to assist businesses involved in research and development to fund these expenditures," said Mr. Dicks. "It is a further step in achieving government's goal of creating for the province one of the most attractive investment climates for business in North America."

R&D activity qualifying for a tax credit would include expenditures on basic research, applied research and experimental development. It will mirror the federal credit in terms of qualifying activities and expenditures. The new credit will apply to expenditures incurred after December 31, 1995.

"In comparing other major industrialized countries of the world, Canada's income tax incentives for research and development spending are recognized as providing amongst the most generous support for this private sector investment activity," said the minister. "I am pleased that Newfoundland and Labrador is able to be part of this successful regime and I am confident the implementation of the tax credit will serve to attract increased research and development activity to this province."

Contact: Karen M. McCarthy, Director of Public Relations, (709) 729- 0110.