You can only expense Canadian R&D expenses; meaning anything that is not completely used up almost immediately is treated as an asset. This makes almost no difference for software development, but is very important (and disadvantageous) in more capital-intensive industries.

There is something similar in France, the Crédit Impôts Recherche (CIR), I remember it was around 50%. I've heard it's going to disappear though, there were abuses.

Meanwhile in one of the world's higest taxed welfare states, where you absolutely can deduct 100% of SW developer salaries I feel I've been taking crazy pills every time reading these threads. It's almost as if some folks in """Hacker""" News wanted this law to stay to further cement gigantic incumbents and make it impossible for bootstrapped companies to compete.

It's 35% of eligible spend on up to $3 million, and 15% above that (15% and 15% if the corporation is not Canadian). Further, most software development simply doesn't qualify-

https://www.canada.ca/en/revenue-agency/services/scientific-...

If you're making websites or doing Shopify integrations, etc, that doesn't actually qualify.

Something truly novel in AI or self driving or whatever -- sure.

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?

I hate to see this, but you’re comparing two completely different systems. Like it or not, but Canada is much more “socialist”, you can’t expect it in any case to be like US or viceversa.