Tax Professionals Discuss USA Strategies Startups Might Consider In Canada

How Canadian Tax Incentives Set Startups Apart

Canada’s tax incentives aren’t only generous; they are designed to foster innovation. The Scientific Research and Experimental Development (SR&ED) program, for example, offers substantial tax credits. Many startups are amazed to discover they can claim tax credits for routine research activities they already perform. But there’s one more twist…

The SR&ED isn’t just a one-time benefit. Startups can claim it annually, with many unaware that iterative improvements made to products can qualify them for even more credits. The ripple effect this has on reducing tax liability is staggering when compounded over years. What you read next might change how you see this forever.

Tax experts suggest another overlooked gem is the Canadian Small Business Deduction, which significantly drops the corporate tax rate for small businesses. With a rate of only 9%, startups benefit immensely, freeing up funds for growth initiatives. This is a game-changer for those used to higher U.S. rates.

There’s also an increasing awareness of the differences in capital gains taxes between the two countries. Canadian rules allow business owners to leverage their capital gains more effectively, potentially increasing personal gains when exiting a company. This aspect is what propels many forward-thinking entrepreneurs to consider Canada seriously.