Canadian Funding for Innovative Technologies
Scientific Research and Experimental Development (SR&ED) Tax Incentive
Program - Investment Tax Credits (ITCs)
The SR&ED program is a federal tax incentive program, administered by the
Canada Revenue Agency (CRA), that encourages Canadian businesses of all
sizes, and in all sectors to conduct research and development (R&D) in Canada.
It is the largest single source of federal government support for industrial R&D. It
is viewed as an incentive program that returns a portion of eligible already spend
on R&D, and is therefore non-competitive in design. It has the advantages of
some certainty (especially where a Pre-Claim Approval process was used, speed,
can be 120 days payment (tax credits or cash) after submission, and banks will
accept SR&ED as equity in many cases.
All project-related expenditures can be submitted. These typically include:
salaries and wages, materials destroyed or used to build prototypes, work
subcontracted to other Canadian taxpayers, and capital equipment. Canadian
taxpayers can recover up to 82% of their expenditures, depending on their
location (within Canada), ownership (Canadian vs. Foreign, Private vs. Public),
taxable income (in the prior fiscal year), and size (amount of capital employed).
Eligible current and capital SR&ED expenditures include wages & salaries,
materials, equipment, overhead costs and other expenditures incurred as a result
of SR&ED initiatives.
http://www.cra-arc.gc.ca/sred/
Eligible expenditures for SR&ED Incentives :
Experimental development - This is the work done to
achieve technological advancement to create, or improve,
new materials, devices, products, or processes. Most
SR&ED claims involve experimental development.
Applied research - This is work done to advance scientific
knowledge with a specific practical application in view.
Basic research - This is work done to advance scientific
knowledge without a specific practical application in view.
Work ‘In Support of’ an eligible activity. Some activities
are not in themselves eligible but are required to make the
eligible activity possible.
Support work - This is work that directly supports and is
commensurate with the needs of experimental development,
applied research, and basic research. It includes
o engineering;
o design;
o operations research;
o mathematical analysis;
o computer programming;
o data collection;
o testing; and
o psychological research
Source: CRA "Overview of the Scientific Research and Experimental Development (SR&ED) Tax Incentive
Program" RC4472
CEAA Research and Development (R&D) Program
The CEAA Research and Development (R&D) Program funds research projects
that further the practice of environmental assessment and/or improve the level of
understanding of environmental assessment issues in support of sustainable
development. Funding is available up to $75,000 over two years, per project.
Program is administered by Canadian Environmental Assessment Agency
(CEAA). Pre-approval is required. Projects must meet the program’s priority
areas and be completed in two years.
Federation of Canadian Municipalities - Green Municipal Fund (FCM-GMF)
FCM's Green Municipal Fund (GMF) is a unique program that supports municipal
initiatives across Canada that benefit the environment, local economies and
quality of life.
GMF grants and below-market loans directly support municipal initiatives, while
GMF education and training resources help municipal governments share
expertise and strengthen their ability to set and surpass their sustainable goals.
FCM's Green Municipal Fund offers grants for feasibility studies and field tests
that seek to demonstrate the potential of a project to improve the environmental
effectiveness of municipal operations related to brownfields, energy,
transportation, waste or water. Municipal governments and their partners are
eligible for grants for feasibility studies and field tests.
FCM's Green Municipal Fund (GMF) offers below-market loans, usually in
combination with grants, to implement capital projects.
GMF can provide financing for up to 80 per cent of costs to a maximum of $4
million in loans combined with $400,000 in grants. Brownfield projects are
eligible for below-market loans only, with no funding limit.
For municipal governments, GMF offers interest rates 1.5 per cent lower than
the Government of Canada bond rate for the equivalent term. Grants are
available for up to 50% of costs to a maximum of $350,000.
Timeline: Six to nine months from application to approval
http://gmf.fcm.ca/GMF/Funding-Studies.asp
Industrial Research Assistance Program (IRAP)
NRC-IRAP is the Government of Canada's premiere innovation and technology
assistance program, supporting small- and medium-sized enterprises (SMEs) (i.e.
under 500 employees) in communities across Canada by providing financial,
technological and networking assistance. NRC-IRAP focuses on early stage
development of technologies. This funding of labour costs is generally 50%,
although some other costs such as specialized materials, equipment, studies, lab
fees, and contractors may also be supported in exceptional cases. Core
innovation and invention activities that carry high technological risk are targeted
for support by IRAP. If your company is a technology neophyte on the business
landscape, IRAP may prefer to work with you in several staged project phases
with specific deliverables towards eventual product innovation, during which the
relationship with you can be developed NRC-IRAP provides non-repayable
contributions to Canadian SMEs interested in growing by using technology to
commercialize services, products and processes in Canadian and international
markets. NRC-IRAP also provides mentoring support and invests on a cost-
shared basis for research and pre-competitive development technical projects,
upon assessment of a project and firm by a team of Industrial Technology
Advisors. NRC-IRAP's partner organizations also receive contributions to provide
technical and research assistance to Canadian SMEs.
http://www.nrc-cnrc.gc.ca/eng/ibp/irap.html
Sustainable Development Technology Canada Fund
Sustainable Development Technology Canada (SDTC) is a not-for-profit, non-
share capital corporation and operates as an arms-length independent
organization. SDTC is accountable to Parliament and has funding allocation of
$1.05B from Government of Canada.
The SDTC Fund supports the late-stage development and pre-commercial
demonstration of clean technology solutions that address: Climate Change;
Clean Air; Clean Soil; and Clean Water. It encourages the formation of new
partnerships that form the basis of sustainable clean tech supply chains and
increase number and rate of uptake of clean technologies into relevant market
sectors. IP is an important part of the SDTC submission.
SDTC has two calls for proposals each year (spring and fall). The SD Tech
Fund™ is structured to increase the success rate of pre-commercial, unproven
technologies.
Provides pre-Venture Capital investment into the
development and demonstration phases (supports ~ 1/3rd of
project costs)
Contributions typically range from several hundred thousand
to several million
Cash contributions are non-repayable and requires no equity
Allows a business to allocate existing resources to run their
core business
Defers or avoids equity dilution financing while building up
value
Business often becomes commercial at the end of the
project http://www.sdtc.ca
NextGen Biofuels Fund
The $500M NextGen Biofuels Fund is aimed at supporting the establishment of
first-of-kind commercial scale demonstration facilities for the production of next-
generation renewable fuels and co-products. The fund will help Canada
sustainably meet its Renewable Fuels Standards. The purpose of the fund is to
encourage retention and growth of technology expertise and innovation capacity
for cellulosic ethanol and biodiesel production in Canada.
Currently, these next-generation technologies, which are capital equipment
intensive, are not progressing to market because they present too great a risk for
the debt finance community. Equity financing is not consistently available and
has been difficult to source in Canada at sufficiently attractive rates of
return. The aim of the NextGen Biofuels Fund is to help bridge this High CAPEX
(Capital Expenditure) gap and remove the final elements of technology risk in
bringing next-generation biofuels into the market. This outcome will enable
larger volumes of next-generation biofuels to be produced, helping Canada
achieve its current renewable fuel standard using environmentally superior
technologies. The NextGen Biofuels Fund is positioned downstream from the
SDTC Fund. Note: SDTC administers the NextGen Fund. The SDTC Fund™
can therefore be a feeder to the NextGen Biofuels Fund. The NextGen Biofuels
Fund, however, is open to all cellulosic ethanol and new biodiesel technologies
once they have been successfully demonstrated at the pilot scale (The
demonstration prior to NextGen funding is preferably a large commercial scale
size that does not have to be in Canada).
The NextGen Biofuels Fund incorporates a requirement that all contractual
agreements between SDTC and Eligible Recipients include repayment terms
based on free cash flow over a period of 10 years after project completion
Other Funding Sources
Provincial and Regional Funds
Each Province has a number of funding agencies. Many (such as Quebec and
BC match The Federal government’s SR&ED program with their own
equivalency – at varying degrees of generosity). There are also a number of
carbon initiatives, clean technology funds (e.g. B.C.’s Innovative Clean Energy –
ICE) that funds projects through calls and is supported by a carbon tax. Alberta
has a clean technology program that has secured funding from offsets from the
Large Final Emitters (very large carbon emitters).
Regional Funding (e.g. Western Diversification and the Atlantic Canada
Opportunities Fund, various provincial and other funding sources are listed in
Industry Canada’ Webpage http://www.ic.gc.ca/eic/site/fte-fte.nsf/eng/Home
BC/Canada Agriculture has the Growing Forward Funds and other funds; Health
Canada has contaminant research funding (regional and national) available
annually. Several First Nations funds can be assessed though DIAND/DPGSC or
projects may be jointly done through Band or Tribal Councils.