Many businesses that we work with are aware of some of the incentives and supports offerred but are unaware of the entire suite of support available to them.
Research and Development Funding for Business Innovation
Research and development activities support innovation and enable Canadian companies to achieve competitive advantages over other domestic and international firms. These types of activities are not just for research-focused companies and large businesses with substantial R&D budgets, but also for smaller companies that seek an edge over products and services that currently dominate the market. Fortunately, Canadian government funding is available to offset R&D costs and help companies stretch their research budgets.
Scientific Research and Experimental Design (SR&ED) Tax Incentive
The Scientific Research and Experimental Design (SR&ED) Tax Incentive is a tax credit that allows businesses to deduct eligible expenditures against current-year income or hold them to deduct in future years. SR&ED, like all tax incentive programs, provides businesses with a dual benefit of deducting current-year income and reducing income tax payable.
The tax credit ranges from 15-35% of eligible expenses and businesses can carry back up to three years or forward for up to 20 years.
Industrial Research Assistance Program (IRAP)
The National Research Council of Canada (NRC) administers and manages the Industrial Research Assistance Program (IRAP) program. Unlike SR&ED, IRAP provides funding by way of a forward-looking grant. Businesses are able to apply for funding prior to engaging in an R&D project and secure a grant to support the costs.
Contribution levels vary, but the program will support up to 80% of direct labour and 50% of Canadian contractor costs against an R&D project. It’s important to note that if you receive IRAP for a project you may still be able to file for SR&ED credits against the same project, but your claim will be impacted.
IRAP grants are a great fit for companies engaging in all levels of R&D and funding can be used to support innovations from early stage development through to pre-commercialization activities.
CanExport Innovation (CXI)
For some R&D projects, a business may need to engage a third party to support. Whether they have unique expertise, access to resources, or are completing a similar project, businesses may be looking for R&D partnerships to help fuel innovation. Programs such as CanExport Innovation help businesses offset the costs of developing a partnership. While the CXI fund will not fund the actual R&D activities, it will support the costs of securing a partnership. This can include costs such as travel, legal, and other required costs that may be incurred in developing an international R&D partnership.
Get Your Innovation to Market
All of the programs referenced above help businesses on the development side. Once your innovation has been tested and developed, you’re ready for commercialization. Similar to the variety of R&D incentives, there are a range of programs available to help a business commercialize an innovation. For example, the Innovative Solutions Canada Program can help you sell your innovation to the Canadian government, and the CanExport program helps you sell into new markets.
Natural Sciences and Engineering Research Council (NSERC) Programs
The Natural Sciences and Engineering Research Council (NSERC) is a federal agency that supports innovation by fostering collaboration between industry and academia. Businesses can partner with academic researchers, grad students, or post-doctoral fellows to support R&D initiatives. This allows businesses to gain access to the talent, expertise, knowledge, and lab resources offered across Canada’s post-secondary institutions. There are two industry-academic partnership programs currently available: NSERC Engage and NSERC Alliance. Both serve different functions and can assist a business in getting an innovation developed.
Get Started with R&D Funding Today
Developing a standardized process for finding a research partner and accessing funding is essential, but not overly complicated. To help you better understand the steps required, Mentor Works has developed the Collaborative Research Project Guide.
Download the Collaborative Research Project Guide to discover how to get started with post-secondary research partners and access NSERC funding.
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