Incentives: SR&ED & other government programs - Ken Bell
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Transcript of Incentives: SR&ED & other government programs - Ken Bell
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Ken Bell PEng, PE (Wash), FEC
Incentive Access Group Corp.
INCENTIVES:SR&ED AND OTHER GOVERNMENT PROGRAMS
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Outline
• Funding For Innovation• Direct v. Indirect Support• Canadian R&D Landscape (Jenkins Report)• Rebuttal (MacIntosh)• Budget 2012• Ken’s Top Five Picks
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Direct Support
• Defined Program Objectives• Unique Application Form• ‘Peer’ Review – meet objectives?• Fixed Budget each FY• Inherent Regional or Sector Bias• Start-Up Advice: Don’t Bend Your Business
Plan Just To Get Funding
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Dubious claims diminish R&D tax creditBARRIE McKENNA, OTTAWA - Sunday, Feb. 06 2011It’s Canada’s marquee innovation program. And it’s broken.
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Business Spending on R&D
• One-third Canadian R&D $$ - 25 firms• One-half - 75 firms
• Most small businesses – no R&D
• Small R&D performers – 40% of revenue• Large R&D performers – 1-2% of revenue
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Government Spending on R&D
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Support Dimensions
2012-2013
0.630000000000001
0.98
1.3
3.53
2010-2011
(2007) $2B large4,000 claims$1.3B small20,000 claims
(2007) 1,100 IRAP grants
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Program Costs
2012-2013
0.630000000000002
0.98
1.3
3.53
2010-2011
$60M
$140M
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“A Bewildering Array”
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Jenkins Findings
• Many tiny direct programs• Unknown to business• No way to measure effect – direct/indirect• Lots of startups, few big winners (2%)• Foreigners buy those few winners• Lack of venture capital?
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Jenkins Recommendations
• Nation: Make little guys bigger• Create National Innovation Ministry• Cut everything but labor from SR&ED• Divert savings to ‘direct’ programs• Government procurement from SMEs• More risk capital• Re-focus NRC’s mission
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MacIntosh on Jenkins
• Salaries-only benefits talent firms (software) • 2% Success Rate is GOOD
Silicon Valley 4% - much greater fundingFirms may license techFirms may plan sell to exit
• DIRECT: bureaucracy, bias, incompetence• INDIRECT: market discipline, way out of VOD• Sponsored Venture Funds a Boondoggle
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Economic Action Plan 2012
• $400M large-scale venture capital funds• $100M to BDC venture capital• $110M to NRC to double IRAP• $95M Canadian Innovation Commercialization
Program• $14M high-quality researchers to industry
(MITACS)• Western Innovation Program• $500M to CFI• Streamline SR&ED program
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Big Changes?
2012-2013
0.630000000000001
0.98
1.3
3.53
2010-2011
0.690000000000001
1.07
1.43
3.1
2012-2013
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SR&ED Changes
• Lower ITC rate (20% 15%)• Still 35% for small CCPCs• Decrease in overhead proxy
(65% 60% 55%)• Equipment excluded c. 2014• 80% of contract payments• $6M (CRA) to ‘enhance’ delivery• Review of provider fees
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Typical Impacts
• Small Software CCPC (salaries) ↓6.1%• Small Software CCPC (contracts) ↓20%• Large Software CCPC (salaries) ↓21%• Large Software CCPC (contracts) ↓32.8%
* includes provincial top-ups
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Program Costs
2012-2013
0.690000000000001
1.07
1.43
3.1
$66M$140M
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Ken’s Top FiveInnovation Programs
• SR&ED• CICP• NRC-IRAP• MITACS• NSERC
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Scientific Research &Experimental Development Tax Credit
• Still the biggest game in town• Company directs research as needed• No delay for approvals• Plan and document• Reasonably fast processing• Use qualified third-party advisor• No regional or sector bias
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Canadian Innovation Commercialization Program
• NEW: $95M• Public Works now test-bed for pre-commercial
innovations• Supplement to MERX• Register firm, register new product• Evaluation criteria• www.buyandsell.gc.ca
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Industrial Research Assistance Plan
• Additional $110M to double NRC support• Identify R&D project• Portion of salary and contractor costs• Vetted by NRC• Funds allotted per FY, apply early• Track record $10K, $50K, $150K, $500K• SR&ED remaining portion to 75%
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MITACS
• $14M over 2 years to double the program• Grad students and post-docs to industry• All industry sectors and disciplines• Apply any time, vetted within 4-6 weeks• $15,000 for each 4 months, $7,500 from
industry gets matching contribution• Your time eligible for SR&ED
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Natural Sciences and Engineering Research Council (NSERC)
• Various funds• Hire a professor, specific R&D problem• Three forms, at any time• Vetted, decisions 4-6 weeks• $25K grant for $50K project• Company must match in-kind• SR&ED for related expenses
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Ken’s Top FiveInnovation Programs
• SR&ED• CICP• NRC-IRAP• MITACS• NSERC
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[email protected] 572 9548 x 320
Ken Bell PEng, PE (Wash), FEC
Incentive Access Group Corp.
QUESTIONS