1. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc.

2. PwC Squeezing the Government Nickel BC Biotech CFO Roundtable Ian Heine, Derek Wong January 16, 2003 PwC © 2002 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP and other members of the worldwide PricewaterhouseCoopers organization.

3. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. Session Overview What are SR&ED Tax Credits? Update on current developments Tips on how to maximize claims

4. What are SR&ED Tax Credits? PwC

5. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. What are SR&ED Tax Credits? “Scientific Research & Experimental Development” –Technological advancement –Technological uncertainty –Systematic investigation Tax credits R&D activities in Canada Amount of credits equal % of qualified expenditures

6. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. What are SR&ED Tax Credits? Tax credits –Federal credit (20 ~ 35% of qualified expenditures) –B.C. credit (10% of qualified expenditures) –Carried backward 3 years, forward 10 years –Refundable as cash for smaller CCPCs

7. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. What are SR&ED Tax Credits? † The combined federal and provincial credit rate assumes the claimant is not a smaller CCPC and that SR&ED is performed in B.C. Example SR&ED Expenditures$ Amount Qualified salaries or wages1,000,000 Qualified materials500,000 Qualified contract payments350,000 Qualified lease costs of equipment250,000 Qualified overhead650,000 Qualified capital100,000 Qualified research contribution50,000 Total2,900,000 Credit Rate (Federal and Provincial)28% † Tax Credits812,000

8. Update on current developments PwC

9. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. Update on current developments SR&ED Partnership Committee Summit of Innovation and Learning

10. Tips on how to maximize claims PwC

11. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. Tips on how to maximize claims Salary vs other types of remuneration For example: –Salary $10 gives ITC $4.62 –Bonus $10 gives ITC $2.80 –Stock Option $10 gives ITC $0

12. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. Tips on how to maximize claims Vacation time and sick leave Actual vacation and sick pay Accrued vacation

13. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. Tips on how to maximize claims Foreign expenditures Acquisition of equipment or materials –e.g. Lab analysis Training Travel

14. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. Tips on how to maximize claims Maximize SR&ED deduction pool Effect of provincial tax credits and other assistance –e.g. up to 8% increase in deduction pool (BC credit) G&A, legal, accounting, conference, etc.

15. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. Tips on how to maximize claims Other funding sources BC tax credit, PQ tax credit, etc. Technology Partnership Canada NRC IRAP

16. PricewaterhouseCoopers LLP BC Biotech CFO Roundtable – January 16, 2003 Leaders: Ian Heine, Derek Wong – PwC Chair: Mike Doty, QLT Inc. Contact information Ian Heine, C.A. –Tax Manager, PwC Life Sciences Group –Phone: (604) 806-7706 –Email: ian.d.heine@ca.pwcglobal.com Derek Wong, B.Eng. –Senior Manager, PwC SR&ED Core Group –Phone: (604) 806-7520 –Email: derek.c.wong@ca.pwcglobal.com

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