The Canadian government spends approximately 24% of GDP on direct and indirect funding programs for businesses. Of that 24%, about 21% is available for indirect funding and 3% is available for direct funding. The indirect funding category is comprised of tax credit programs, while the direct funding category is comprised of repayable and non-repayable grants. The government is slowly shifting focus from indirect funding and introducing new direct funding programs for businesses.
The SR&ED program previously allowed businesses to claim capital equipment expenditures as part of their project submission. However, the new changes that came into effect January 1, 2014 removed capital expenditures as eligible expenditures. The government has since introduced direct funding programs such as CME Smart and Investing in Business Growth and Productivity. The introduction of these new programs has allowed businesses to still apply for capital equipment funding and receive assistance alongside the SR&ED program.