Starting in 2022, US companies could not deduct SWE salary expenses in the same year, only over 5 years like hardware CapEx. For big companies, this will roll over in 2027. Meanwhile, LLM expenses can be written off immediately as OpEx.
If you hire Canadian software engineers, you can dodge this and deduct the expenses in your Canadian subsidiary. If you outsource software dev to another company you can usually get away with expensing it.
Historically there has been a brain drain from Canada to the US, but if Canada can set up favourable policies for companies maybe they can start reversing that.
https://www.grantthornton.com/insights/alerts/tax/2023/flash...
The TCJA amended Section 174 by removing the option to expense SRE expenditures, instead requiring taxpayers to capitalize and amortize SRE expenditures over a period of five years (attributable to domestic research) or 15 years (attributable to foreign research)The Canadian government also heavily subsidises this. Smart of them to do so.
And our government is busy prattling on about putting tariffs on Canadian maple syrup or something…