More R&D Funding In The Next Budget?
Industry and Ottawa talk-up possible changes to SR&ED and other programs
Some possibilities to watch for:
> More SR&ED benefits as cash refund vs. ITC?
> Flow-through share scheme for R&D commercialization?
> Tax credits for technology training?
> Clarification of SR&ED rules?
Ever since the Conservative government started curtailing the Technology Partnerships Canada
(“TPC”) funding program earlier this year, tax credits have moved to centre stage in Ottawa's
science and technology incentive strategies.
Since early September of this year, there has been vigorous dialogue between Ottawa and
some of Canada's most influential industry groups on exactly what changes are needed,
especially with regard to SR&ED tax credits.
There is mounting evidence to suggest that the next federal budget – expected March 2007 -
might well feature significant changes in federal support for private sector R&D. These changes
could include improvements to the SR&ED tax credit program both in terms of benefit levels
and in how CRA delivers it. Another possibility is some form of new flow-through share scheme
- long used as an effective incentive for the Canadian mining industry - to help technology
companies raise capital to commercialize R&D results.
Although on the surface industry lobbying might seem at the root of this initiative, much of the
ground work was laid by a massive survey study undertaken by The Council of Canadian Academies
that was commissioned by Ottawa in June 2006, not long after Stephen Harper formed his new
government. The Council's report – delivered on September 12, 2006 – set the stage for the new
government's Science & Technology policy. Notable in the report's findings were industry survey
results that gave high rankings to SR&ED tax credits as a highly effective means for “supporting the
commercialization of research”. Notably absent in that report was any positive reference to TPC. We
believe that some form of flow through share scheme may be implemented to replac