The Information Technology Association of Canada (ITAC) recently released a commentary on the changes to the SR&ED program on behalf of the Information and Communications Technology (ICT) industry.
Generally, ITAC has consistently articulated the view that the best mechanism to keep research mandates in Canada is a tax-based SR&ED (indirect) incentive program. ITAC members prefer indirect methods (over direct funding models) because indirect models are predictable, and their impact on the company’s bottom line is measurable. ITAC members also prefer indirect methods because they are generally accessible to all R&D performers without bias.
ITAC points out that in spite of the criticism heaped on the SR&ED program, SR&ED produces a clear 11% return on investment to the Canadian fiscal system (Source: M. Parsons and Phillips, “Tax Incentives for Scientific Research and Experimental Development,” Consultation Paper, Finance Canada, 2007). If investment to SR&ED is reduced in favour of direct funding programs, then there is a need for transparency on the return that the changes to the “innovation portfolio” will produce. If the shift to direct funding does not create more high value employment, stronger employment, stronger enterprises, and greater wealth, then SR&ED, and its proven benefits, must be restored to its former investment levels.
