SR&ED Updates: Streamlining or Stifling?

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sred cuts

SR&ED Changes: Streamlining or Stifling R&D?


Updates to the SR&ED program in the 2012 budget that changed the structure of the program were implemented in fall 2012. Many parties lauded the updates, which were designed to simplify the complex rules and terms of qualification and thereby streamline the program. Others, however, worried that these changes represented cuts to funding for research, development, and innovation.

Our favourite quote from the July 4th, 2012 Financial Post article Why Cut Innovation? is as follows…

This change is ill advised. Many of the 20,000 CCPCs taking advantage of the SR&ED are early-stage firms that reside in what is often styled the “Valley of Death” — the capital-starved region sandwiched between government-financed basic and applied research, and later-stage private funding by angel investors, venture capitalists, and strategic partners. For many of these seed-stage firms, the SR&ED is the only available source of external funding. Any reduction in the SR&ED will inevitably increase the number of carcasses littering the floor of the Valley of Death. This is a matter of consequence because the vast majority of firms introducing consequential innovations were dainty little acorns before they grew into mighty oaks. If the forest floor is scoured of acorns, where will the mighty oaks come from?

Where do you stand? See what the Financial Post has to say!


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