Transformative Changes to R&D Funding Upcoming

In a recent interview with the Financial Post, Gary Goodyear (the Minister of State for Science and Technology) said that the federal government will be announcing changes to the way Canadian businesses obtain venture capital and research and development funding.  The plans to change existing infrastructure comes after the recent 2012 federal budget that reduced the Scientific Research and Experimental Development (SR&ED) program, while providing the Industrial Research Assistance Program (IRAP) a funding boost of $110 million.

There have been concerns that a shift from indirect funding (i.e. SR&ED tax credits) to grant-based direct funding could:

1.  Increase government overhead, bureaucracy, red tape, and make the application process more burdensome for small businesses.

2.  Make access to funding more subjective.  A direct approach would place the decision-making process for funding in the hands of the government, instead of the indirect free-market approach that SR&ED advocates.

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