Proposed Changes to Research and Development Funding

A common barrier to innovation and productivity within Canada is the inability to access Government Funding for Research and Development. Recently an expert review panel has released a list of recommendations to simplify the research and development funding process for Canadian SMEs. These recommendations look to streamline the application process without significantly altering the actual amounts of Canadian Government funding available.

Recommendations for Government Funding Canada

After a year of consulting with hundreds of stakeholders through meetings, submissions, and surveys, the panel finally agreed upon six recommendations to the federal government funding for research and development:

Introduction of an Industrial Research and Innovation Council:

This IRIC would consolidate the funding information and application details for all the federal government’s R&D funding programs. This would free up some of the resources and confusion that arise from having multiple federal grant agencies with the same overall objectives.

Programs/Agencies Involved :

IRAP – Digital Technology Adoption Pilot Program (DTAPP) : $100K grant – 80% of direct labour; 50% of sub-contractor fees towards the adoption or customization of new technology that will increase your productivity.

IRAP – Accelerated Review Process : $50K grant – 100% direct labour, 75% sub-contractor costs for software implementation, productivity improvements, production design or marketing projects.

NSERC – Engage Program : $25,000 grant to connect businesses to university researchers for new R&D partnerships that take place over 4-6 months.

Simplifying the SR&ED Tax Credit:

The panel has suggested that the SR&ED tax credit should only apply to labour related costs and the tax rate should be adjusted accordingly to compensate for these changes. This will simplify the highly complex process of calculating all the non-labour related costs associated with research and development projects.

Programs/Agencies Involved :

Scientific Research and Experimental Development Tax Credit (SR&ED) : Program offering 20%  of R&D expenses as a refundable tax credit for SR&ED.

Increased Access to Risk Capital:

New and innovative firms are usually the ones that carry the greatest risk along with the greatest potential for growth. The panel is recommending an increase to the amount of Canadian Government funding and financing innovators and start-ups so they can realize their full growth potential.

Programs/Agencies Involved :

BDC Financing Programs: Low interest financing for small business expansion projects.

Development of Collaborative R&D Institutes:

The panel recommends the business –oriented institutes of the National Research Council (NRC) to become independent collaborative research organizations to focus their efforts on specific sectoral research or innovation strategies.

Programs/Agencies Involved :

Collaborative R&D Programs with Post-Secondary Institutions: Several business funding grants for research collaboration with post-secondary institutions.

Public Sector Procurement:

The panel recommends the government to become more proactive in the procurement of technologies and innovations that stimulate the economy and increase the competitiveness of Canadian businesses in global markets.

Programs/Agencies Involved :

Canadian Innovation Commercialization Program (CICP): $40 million dollar Canadian Government procurement and acquisition program for per-commercialized products and services.

Whole-of-Government Leadership:

Centering business innovation as the major priority within our Canadian Economic Strategy, they suggest the government to implement improvements towards the oversight of our action plan through increased co-ordination and communication between provinces and communities regarding  their innovation initiatives.

Canadian Government Grant Updates

The entire report support can be viewed from the Review of Federal Support to Research and Development Website. To receive more up-to-date information or advice regarding Canadian Business Funding Grants, contact Mentor Works or sign up for our Weekly Canadian Government Funding Newsletter. Businesses can also follow us on Twitter and LinkedIn.

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