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The New Innovation | R&D in Canada

Based on a speech delivered by Bombardier Inc. president Pierre Beaudoin on Wednesday, Nov. 13,2013.

Bombardier President Pierre Beaudoin’s ideas and thoughts on innovation send an important message to Canada’s innovators and policy makers. For innovators the message is clear that strategic innovation takes time, patience and investment – but is essential to Canada remaining competitive in a global market place. For policy makers in Canada the message is to support SMEs with even better R&D incentives like the Scientific Research and Experimental Development tax credit.

Beaudoin points out that there is a significant wave of change under way in terms of how innovation is occurring globally. He points out that as a country it is imperative that we pay attention to the changes that are happening and either adapt or be left behind.

He urges that it so important for Canada to keep pace with global innovation because innovation that reaches commercialization builds sustainable growth. Innovative products, processes and services increase productivity, income per capita and the quality of social programs.

The fundamentals of innovation

Fundamentally, innovation requires a number of factors to fall into place:

an entrepreneurial environment and an appetite for risk,
sufficient investment in R&D especially by the private sector,
high quality scientific research centres,
extensive collaboration between universities and industry,
high levels of competition,
access to capital and financing,
and, last but not least, the need to be persistent and tenacious.

In terms of access to capital and financing, Beaudoin affirms the excellence of R&D tax programs like SR&ED. He urges that innovation needs this type of public-private sector partnerships to continue to foster friendly and supportive environments, especially to make long-term research project feasible.

He also suggests some improvements for the SR&ED program and the need for further programs. He states that these programs, although excellent, “do little to alleviate the problem faced by many cash- strapped SMEs who have few options for securing the early-stage funding needed to advance their innovative ideas. This financing challenge often stops innovation dead in its tracks. To address the issue, the taxable income and capital thresholds to qualify for the small business refundable Scientific Research and Experimental Development (SR&ED) tax credit of 35% should be raised to alleviate some of the pressure faced by pioneering SMEs.”

Inclusive innovation

Beaudoin points to a change in how innovation occurs in and beyond the organization, a change that sees more conversations happening with diverse groups of stakeholders. His experience, points to fostering conversations between employees, customers, suppliers, partners, end-users and even competitors.

As a country Beaudoin urges industry leaders and policy makers to make the strategic choice to create value through innovation. By improving Canada’s infrastructure for innovation and by encouraging, expecting and rewarding people for challenging the status quo and risking failure to find a better product, process or service, this can be a reality.

Innovation Resources

As R&D incentive consultants Enhanced Capital Recovery can help your organization capitalize on R&D incentives in Canada. If your organization is innovating products, services or processes, contact Enhanced Capital Recovery today to see how we help support your mission to join to new wave of global innovation.

SR&ED Claim Review? What to Expect from the CRA

What is the SR&ED Claim Review Process?

The Scientific Research and Experimental Development (SR&ED) claim review is a process involving many steps and individuals. But what exactly happens at the Canada Revenue Agency (CRA) once your claim is filed? Here is what you can expect during the review process.

Determining if you qualify

The CRA’s first step is determining whether your company and projects meet the basic criteria. Are you a Canadian Controlled Private Corporations (CCPC)? Is your T661 form completed correctly? Has your company attempted to overcome a technological uncertainty? Have you used research and development (R&D) to advance technology?

This is also the stage where a CRA financial reviewer inspects whether the expenses you outline in your claim are eligible costs for SR&ED program funding.

Technical aspect review

Once the basic requirements have been determined, the CRA science advisor—sometimes with the assistance of an outside industry expert—further inspects the technical aspects of your claim.

This involves the review team analysing whether your project employed R&D to solve a technological or scientific problem. It will also investigate how you measured the success of your project, and to ensure the knowledge gained was innovative to your company.

Request for information

In some cases, the CRA review team will request additional information. This can provide further evidence to support your claim or to answer questions for clarification. Should this be necessary, you will be contacted by a science advisor with a specific request.

An outside consultant may also be contracted during this stage to clarify information for the review team. The CRA is familiar with all consultants and confidentiality is ensured in every claim.

Site visit or interview

The CRA may request an interview or site visit when verbal clarification or additional documentation is insufficient. During an interview, the science advisor, possibly accompanied by a consultant, will identify the areas of your claim that are unclear.

The interview may also be to determine whether the projects were sufficiently documented and that costs were spent as claimed. For this reason it is essential to document and organize evidence of your claim.

Enhanced Capital Recovery can ease the process

Allowing a tax consultant like Enhanced Capital Recovery to take care of your SR&ED claim can ease the review process and even reduce the waiting period.

An accurate claim, complete with industry-specific information, will leave the CRA with less reason to request information or site visits for clarification. Our consultants are knowledgeable with the entire review process and could identify additional qualifying projects.

To find out how we can provide efficient assistance in submitting your claim, contact ECR today for a free consultation by phone at 1-800-470-0235 or email us at info@enhancedcapitalrecovery.com. We look forward to hearing from you.

How the Technology Industry Benefits from SR&ED

The federal government’s Scientific Research and Experimental Development (SR&ED) program offers funding to a variety of sectors, and Canada’s Information and Communication Technology (ITC) industry is reaping the benefits.

While all sectors benefit from the program’s assistance, its contribution to the ITC industry allows Canadian technology experts to focus on their innovations rather than searching for funding.

The ITC sector grows with each new advancement and the SR&ED program helps make Canada a leading contributor to the global industry, while strengthening the national economy and creating jobs.

How SR&ED helps the ITC sector

The SR&ED program provides assistance through tax credit and return incentives, allowing Canadian ITC corporations to recover up to 65% of eligible expenses. The program contributed nearly $60 million to the sector in 2009 and the industry is continuing to expand.

A variety of sub-industries are included as ITC companies eligible for funding, allowing for a broad range of assistance in the sector. Areas include software and firmware development, telecommunications, artificial intelligence, and others.

The federal government is committed to Canada’s technology companies, and spends over a third of its research and development funding on the industry.

Tangible effects in the industry

Last year the ITC sector contributed over $62 billion to Canada’s GDP and its scientific research enterprise was ranked fourth in the world. That investment is already evident as technology companies contribute innovations to the global marketplace and see their profit margins flourish.

EcoSynthetix, an eco-friendly product manufacturer, relocated from Michigan to Ontario in favour of Canada’s government incentives and lower production taxes. It is now the country’s second-fastest growing technology company and is a world leader in green product supply.

In recent years Canada’s digital gaming industry has grown into one of the globe’s most competitive and successful markets. Industry giants Electronic Arts and Ubisoft have studios in Canada and several start-ups like BioWare and Other Ocean Interactive have found worldwide success.

Canada has also recently produced technology-advancing innovations, like Trusted Positioning Inc. redefining navigation systems and Pavemetrics Systems Inc. created a laser technology able to inspect transportation infrastructures at 100 km/h.

Organizations like these are benefiting by taking competitive advantage of incentive programs like the SR&ED program. From start-ups to small and large companies, if you’re not taking full advantage of such programs, you may be leaving valuable resources on the table.

Let Enhanced Capital Recover help your company

ECR works with companies of any size, and many of Canada’s ICT enterprises are smaller groups with fewer employees.

With SR&ED consulting offices in Vancouver, Edmonton and Toronto, our team has brought success to various Information and Communications Technology companies, including those whose claims were initially rejected by the Canadian Revenue Agency. Your company will work with a consultant knowledgeable in the industry to recover the most funding, with the least amount of risk possible.

For a no-obligation consultation, submit a contact form and our team will arrange a free assessment of your SR&ED case.