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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.

r&d funding for innovation in canadaBombardier 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.








 

10 Examples of SR&ED | SR&ED News!

In an important piece of SR&ED News, the CRA has posted 10 draft examples that illustrate key concepts in the sred examples and lessons craEligibility of Work for SR&ED Investment Tax Credits Policy.  The purpose of the examples is to illustrate and clarify key concepts described in the Eligibility of Work for SR&ED Investment Tax Credits Policy.

Here’s a summary of the SRED examples to help you pick out the most useful and applicable ones to your SRED claim.

The difference between technical problem and technological uncertainty – Example 1:

This example of a pump supplier shows how solving a technical problem is not eligible for SRED, but that solving technological uncertainty is.

It is shown that by fixing a technical problem, the pump supplier demonstrated standard practice.  By experimenting with several failed attempts to change the conditions that created the problem, the pump supplier demonstrated overcoming a technological uncertainty.

The use of established technology in an uncertain situation – Example 2:

This agri-business example shows that technological uncertainties may arise from limitations in the use of current technology.  Although the technology used already existed, since there was no publicly available information on the use of it in this particular application, it qualified as SR&ED to apply the technology to a new situation.

How solving a problem to meet cost targets may qualify for SRED – Example 3:

Although meeting cost targets alone does not qualify for SRED, this example shows that technological uncertainty that arises from the need to avoid using a costly process, could qualify for SRED.

Using standard techniques in a new scenario where the outcome is fairly certain – Example 4:

This greenhouse grower example of SRED not applying shows that applying standard techniques to a new scenario where the results are reasonably expected, does not demonstrate scientific research and experimental development.

Testing a hypothesis – Example 5:

Using a glue producer, this example shows that testing a hypothesis from another scientific discovery and applying it to a manufacturing process is a form of SRED.

The difference between experimental development and trial and error testing – Example 6:

Using a pizza maker as an example, this example shows that by not demonstrating analysis of experimental results, the pizza maker only showed trial and error and not experimental development.  This did not qualify as SRED.

New products are not necessarily SRED eligible – Example 7

Showing the example where a company makes a carrot peeler with a glow-in-the-dark handle, which is a new product, but doesn’t challenge any technological uncertainty.  Whereas when the company redesigns the handle to improve ease of use and has to experiment with manufacturing processes using new plastics, it meets the criteria.

The part of the project involving applied research is the only SRED applicable part – Example 8

This example shows that a hockey stick maker experimented with a new manufacturing process and conducted testing on the first 500 units.  This work counted as SRED, but the subsequent 1500 sticks produced in the project did not.

The same type of work could be considered SRED or not SRED based on whether it is routine work or not. – Example 9

This example shows the work of a lab technologist performing routine data collection which does not apply as SRED and also additional data collection for a SRED project which does apply.

A SRED project may be just a part of a larger company wide project – Example 10

In this electronic component producer example, the producer runs into a problem with the size of one of the components.  The producer contracts the miniaturization of the component to another company.  This part of the project is considered SRED eligible though the entire project is not.

About Us

Enhanced Capital Recovery’s goal is to assist companies such as yours to truly understand what SR&ED is, what areas in your organization may be eligible under the program, and then assist you through the entire process.  Please call us at 1-800-470-0235, visit us online at www.enhancedcapitalrecovery.com  or email us at info@enhancedcapitalrecovery.com for a no obligation consultation today!