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Working with our membership, ITAC establishes and sets targets for where Canada's knowledge economy should be compared to key peer/competitor nations. Where we fall short, ITAC determines what we need to do to get there and ensure we do what is needed in areas such as: skills, capital, tax, science & technology, and collaboration.
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Jenkins Report Recommends SR&ED Changes for CCPCs
Posted October 17, 2011
Citing the need to address “a funding system that is unnecessarily complicated and confusing to navigate,” the Expert Panel leading the Review of Federal Support to R&D released its report today. Among its six major recommendations was simplification of the tax credit system used to support small and mid-sized business. The Panel recommends a reform that would base the SR&ED credits for Canadian controlled private companies solely on labour related costs. Because the credit would be calculated on a smaller cost base than at present, the Panel recommends increasing the rate, but does not specify by how much.
ITAC has long been a proponent of a labour-based approach to SR&ED credits as a measure to address access issues for large Canadian and multinational R&D reformers who for a variety of reasons derive no benefit from SR&ED credits. The report makes no provision for this class of taxpayer though it does suggest that: “Overtime, the government should also consider extending this new labour-based approach to all firms.” Generally speaking, a labour-based approach works advantageously in ICT R&D where the greatest proportion of costs are labour related (though there are some equipment intensive small to mid-size R&D performers in the ITAC community). ITAC’s community of CCPCs has generally expressed the highest level of satisfaction with the existing SR&ED regime. ITAC has not made specific recommendations for reform on behalf of CCPCs. While we welcome the introduction of the notion of a labour-based credit program, we will be consulting with our membership to assess the broader implications of this recommendation.
The Panel’s report contained five other recommendations:
- The creation of an Industrial Research and Innovation Council to deliver the Federal Government’s business innovation programs (including IRAP which the panel recommends bolstering).
- Make business innovation one of the core objectives of procurement.
- Transform the institutes of the National Research Council into a series of large scale collaborative centres for research, innovation and commercialization.
- Help high growth innovative firms access risk capital through BDC funds targeted at early stage investment as well as later stage ($10 million or higher) investments.
- And establish a clear Federal voice for innovation (i.e. assign accountability for innovation to a single minister).
Access the full report
(http://rd-review.ca/eic/site/033.nsf/eng/home)
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