Supporting Canadian Corporate Innovation with SR&ED

By Ana Ramos, PhD.

When I first joined the world of science in 2010, I was so excited to contribute to innovation. I had dreams of developing technology that would change our society and make a meaningful contribution to achieving true sustainable development. Even though my doctoral thesis in bioenergy production will not win a Nobel Prize (oh man!), I hold on dearly to those dreams and I am still deeply inspired by innovation.

I might have left the lab bench, but my quest for innovation persists.

Canada is a country rich in talent. Last year alone, Canadians submitted more than 4,950 patent and industrial design applications to the Canadian Intellectual Property Office (CIPO), and in the third quarter of 2018 industrial production in Canada grew 9.5%, compared to the growth of 5.2% for the United States and 4.2% in Germany. With the USA submitting over 16,000 patents to the CIPO last year, we certainly have room to grow, but we are moving in the right direction.

The way I see it, 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.


It doesn’t hurt to have big toys to play with, but creativity is key here! Your hard work and dedication will allow you and your company to get bigger toys. So I want to make an invitation to companies in Canada to dream big and grow through innovation. It is up to you to tilt the balance in favour of a healthier, richer, brighter, stronger, and more sustainable future.

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

When people ask me about the SR&ED program, they often express feeling intimidated by certain words that describe the eligibility criteria, such as ‘scientific knowledge’ or ‘technological advancement.’ Innovation is not restricted to rocket science or reinventing the wheel. If your company is getting creative, and finding new ways to do things in your industry, you might be missing out on SR&ED money! Whether you are perfecting your brewing practices or developing new software, I highly encourage you to investigate the SR&ED program.

If you are not sure whether your company is performing SR&ED eligible work, give me a shout! In support of innovation, I would love to provide a complimentary assessment to help your company continue your innovation projects.

Dr. Ana Ramos is a Senior Advisor at think.SRED, where she supports companies interested in participating in the SR&ED program, from identifying eligible work, all the way to the preparation and submission of the SR&ED claim. She received her BSc. in biotechnology engineering from ITESM (Monterrey, Mexico) and her Ph.D. in molecular biology from Queen’s University. You can contact Ana by email and LinkedIn.

References:

OECD (2019), Industrial production (indicator). doi: 10.1787/39121c55-en (Accessed on 12 February 2019)  

CRA (2015), Eligibility of Work for SR&ED Investment Tax Credits Policy. https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/eligibility-work-investment-tax-credits.html. (Accessed on 13 February 2019)

Video credit: Genecis – Future of Plastics from Vimeo.