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By Ana Ramos, PhD.

Our industry is pushed by innovation in a similar way that evolution pushes nature. Companies need to stay on top of their products and technologies to stay competitive within their industry. Survival of the techiest, if you will.

Innovative technologies and products do not necessarily need to come out of a lab the likes of NASA. We do what we can with what is available to us. As an example, the CEO of Genecis, one of my favourite startups in Toronto, tells the story about how her company’s technology started out using rice cookers as bioreactors! And they have developed one of the most innovative technologies out there, turning organic waste into bioplastics.

Now, I once heard a very wise man say: “advice is welcome when it comes with the means to achieve it. Otherwise it is not so different than complaining”. So let me support this motion by providing information about one of the largest incentive programs the Government of Canada offers to foster innovation: the Scientific Research & Experimental Development (SR&ED) program, or “SHRED”.

The Scientific Research & Experimental Development (SR&ED) program

The SR&ED program exists to foster innovation. This program rewards for-profit companies in Canada that are performing work to advance our scientific and technological knowledge, distributing over 3 billion dollars each year. Through the SR&ED program, a company can obtain the following benefits on eligible work:

  • Approximately 65% of dedicated salaries and wages,
  • Over 30% of sub-contractors’ fees, and
  • About 45% of fees incurred on wasted materials, prototypes, consumables, etc.

The SR&ED program is administered by the Canada Revenue Agency (CRA), so the benefit that can be obtained by a company performing SR&ED eligible work is linked to their corporate tax return. Therefore, the company could see these benefits in the form of a tax credit or as a cash refund.

Yes, you can opt for a cash refund of your SR&ED-related expenses. Cha-ching!

But first, let’s get something straight… The SR&ED program is a reimbursement of eligible expenses, not a grant. The main difference relies on the nature of the benefit: if the company is conducting eligible work, the company is legally entitled to that money. It is not a competition for money; it’s reclaiming the money that you are legally entitled to.

So who can apply to this program? Any company conducting basic research applied research or is conducting experimental development to develop or improve a product could very well be performing SR&ED-eligible work. To determine if your company is conducting an SR&ED project, there are three main eligibility criteria to be met:

  1. An SR&ED project seeks to solve a scientific or technological uncertainty
  2. The uncertainty faced in the SR&ED project is addressed through a systematic investigation or search
  3. Advancement of scientific knowledge or technological advancement result from the SR&ED project

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