OBBB signed: Reinstates immediate expensing for U.S.-based R&D

So it means that indirectly, developers' salaries are not a taxable income in Canada if they are working on R&D? Meaning, they do pay taxes on their income, but their employer gets those taxes back, so if tax is 60%, the employer could pay 250% of what they'd pay otherwise, get 150% back, then the developer pays 150% of taxes, and gets 100%, so in effect the salary is tax-free. Is that what you meant to say?

If so, it sounds almost too good to be true. Why aren't all startups in Canada?

There are many limits on SR&ED, and the reporting/auditing process is burdensome. Canada also suffers from a variety of other inconveniences, mostly related to its dependence on resource extraction-related industries.

Canada's lack of startups is heavily cultural.

We adopt new products less. We are far more risk averse about purchasing goods or services from startups, far more risk averse about funding them (founders often give personal guarantees to get the investment), value the equity startups offer at far less, etc. Government is far more fussy about accountability with that refundable R&D money, so lots of time is spent filling out paperwork and hiring consultants to do it.

Here is a video that explains a lot about Canadian purchasing:

https://www.cbc.ca/player/play/video/1.4596459

Yeah, I never thought of it that way. Your plan sounds great, but, in practice how it works is you get paid about half of what you would get in the US. Currently less than half due to the unusual currency exchange rates.

I don’t think this is uniquely Canadian. And it’s usually semi-rational, if you really hate dealing with switching. Most cheaper subscription providers will give you a good deal at first, then jack up the prices when they’re bought by a major provider. New cheaper providers are founded, and the cycle continues. The cheaper prices last for two or three years, or similarly short. Most people would rather take the loss than having to pay attention to this stuff.

The cultural bit is underrated. Tobias Lütke from Germany is the co-founder and CEO of Shopify has written about this issue of Canadian business culture extensively. Also, the ecosystem of VCs in the US are unmatched globally. And, the internal market in US is f'ing huge.