Many newly launched and growing companies are like hot-air
balloons that want to soar upwards, but ropes hold them tethered to
the ground. Those "ropes" take the form of cash
constraints – just not enough money available to take
advantage of all the opportunities.
Yet many companies focused on innovation are missing out on ways
they can boost their cash flow to provide money to meet expenses,
through government programs designed to foster new
Many of the funding programs have been in place for decades,
part of the federal government's drive to foster high-value
employment that involves research and development. They have
already created huge benefits for companies that learn to use them
effectively, so that companies that haven't taken the time to
learn are at a disadvantage.
Companies that learn to consistently enhance cash funding
through tax refunds and tax reductions in concert with many of the
available funding programs have a significant advantage when it
comes to funding growth, without the potential downsides of
Advice, connections and funding
Some of the many research-based funding programs that help small
to midsize companies succeed are:
Assistance Program (IRAP) – a program of the
National Research Council, IRAP helps fund Canadian
small-to-midsize enterprises (SMEs) who are developing innovative
Ontario Centres of Excellence
(OCE) – This program works in partnership with
industry and academia, to co-invest in order to commercialize
innovation originating in the province's colleges, universities
and research hospitals.
Mitacs – This
national organization funds research in partnership with
universities, industry, and both federal and provincial
governments, to support innovation in Canada.
Tax refunds and tax reductions for advancing technology
One of the most widely-accessible programs is the Scientific
Research & Experimental Development Program (SR&ED).
SR&ED provides significant tax incentives to Canadian
businesses that advance technology leading to new or improved
products, processes, materials or devices. It doesn't have to
be a single giant leap of innovation to be eligible for SR&ED
– the program allows for incremental improvements too.
Some company leaders may have heard of SR&ED, but believe
that the work they do does not qualify for the program, or that
it's too much trouble to be worthwhile. Yet this program awards
over $3 Billion per year to over 20,000 taxpayers, 75% of these
being small businesses. And there's no need for a dedicated
research facility – most claims are made based on work within
commercial operations. The benefits are structured to favour of
In many cases, the refund arrives within two months of filing
– a potential lifesaver regarding cash flow. Some financial
institutions will extend credit based on a successful SR&ED
Canadian-owned corporations (within the CRA's definition)
can earn over $60 for every $100 of salary expenditure, refunded as
cash. Foreign-owned corporations and individuals can earn over $20
for every $100 of salary expenditure, which reduces taxes
Qualifying claims must be filed within 18 months of the
company's fiscal year-end.
It is a significant advantage if the claim is made by a
third-party firm that is highly knowledgeable of your industry and
that has an excellent track record in both tax filings and
SR&ED claims, and which is well known and experienced in
working with the many funding sources.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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