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Ontario Leads in Life Sciences, ICT, and Automotive Innovation

A favorable business climate, highly educated work force, and spirit of innovation are helping Ontario advance its economy.

Steve Stackhouse-Kaelble (June/July 10)
(page 3 of 3)
An Innovation Economy
Invention and innovation are not new to Ontario. This is where Alexander Graham Bell conducted groundbreaking research that shaped today's communications, and where Research In Motion created the BlackBerry. Insulin as a diabetes treatment, IMAX movies, and time zones were all born here.

Ontario's business-friendly tax environment for research and development is helping the province add to that list. For every $100 a company spends on R&D in Ontario, tax credits bring the actual cost as low as $35, Pupatello says. "Any of the sectors that require intensive R&D to innovate and get to the next generation of their product get a very healthy R&D tax credit," she says.

Ontario is generous in its criteria for claiming R&D expense credits. "The definition of what we include as a credited expense is much larger," Pupatello says. Salaries, a significant chunk of research money that isn't counted by some jurisdictions, are covered in Ontario. "That's a big thing to be able to count," Pupatello adds.

Besides R&D credits, three successive provincial budgets have decreased Ontario's corporate interest rate, Pupatello says, as well as tax changes favorable to small businesses.

The tax on business investment in Ontario is being cut practically in half due to business tax cuts and the move to a harmonized sales tax, making business in Ontario more competitive. And its 33 percent corporate tax is relatively low, according to a 2009 Deloitte study.

All the tax cuts in the world wouldn't be worth much if the province didn't have the resources and brainpower to support innovation. Ontario's work force is well-educated and highly skilled. More than half of workers ages 25 to 54 years have a postsecondary certificate, diploma, or university degree. "It's much easier to grow a cluster when you have the people to work in it," Pupatello says.
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