Canadian Government Calls on Assistance from CATA to Improve SR&ED Funding

The Canadian Advanced Technology Alliance’s (CATA) published a report on July 26, 2017 stating the reduction of federal government (both Liberal and Conservative) innovation funding by $5.3 billion by reducing the value of the Scientific Research and Experimental Development (SR&ED) tax credits between 2009 and 2016. Following this, the Canadian Department of Finance and the Ministry of Innovation, Science, and Economic Development have asked CATA to provide one-page legislative briefs to help guide policy updates.

CATA CEO John Reid strongly supports this intent. However, he states that “the government’s process for this critical overview remains particularly opaque to our members with interest in the SR&ED program.” He is concerned that this uncertainty will decrease the value of the credits as a business incentive.

CATA has already sent out two one-page briefs to all federal MPs. The first outlines the information they believe should be publicly available in order to conduct an effective, credible and transparent SR&ED review. This includes details of which ministries are responsible for what and measurable targets for proposed tax instruments. The second proposes ways the government could redevelop the tax system to more effectively support business innovation and economic development.

Reid believes that a transparent dialogue and collaboration between the community, MPs, and key government officials is required to move the discussion forward and improve the SR&ED tax incentive policy.

In early July, the Liberals emphasized interest in developing an “innovation agenda” including a $1.2 billion strategic innovation fund. This plan, CATA states, is a “significant improvement over the government’s previously-announced SR&ED tax incentive policies review.” However, they believe specific action items, outlined consultation/study topics, and defined desired outcomes are also required for an effective review.

To learn more about the SR&ED tax incentive and see if your company qualifies for research and development benefits, contact Swanson Reed R&D Tax Advisors.