Mr. Speaker, in response to (a), the amount of SR and ED investment tax credits, ITCs, that have been earned but not used to reduce taxes and are available to reduce taxes in future years was $5.9 billion at the end of 2004. This figure is subject to revision when tax returns are filed and processed by the Canada Revenue Agency. The estimated dollar value of these unused credits would depend on at what point, if any, the ITCs would be used during the carry forward period before they expire. As the use of these ITCs in future years is affected by the future financial conditions of particular companies, it cannot be known with certainty. Information is available on the amount of ITCs earned in previous years and used to reduce income taxes payable in the current year. In the publication “Tax Expenditures and Evaluations”, the Department of Finance provides annual estimates and projections of this amount.
In response to (b), the Department of Finance reviews the effectiveness of tax incentives on an ongoing basis. In this context, the department will continue to review the SR and ED program to ensure its effectiveness in the context of the overall federal strategy of providing assistance for R and D. For example, the 2006 budget extended the carry forward period of unused ITCs, including SR and ED ITCs, from 10 to 20 years. The increase in the ITC carryforward period will be of particular benefit to some businesses, such as research-intensive companies, which may realize little profit for extended periods.