Today, StatsCan released results about spending on R&D in the higher education sector.
In 2008/2009, spending went up 7.3% from the previous year to a total of $10.9 billion. About two-thirds of the R&D spending occurred in Ontario and Quebec, and most of the R&D that occurred got it’s funding from higher education institutes and/or the federal government. (Source.)
A lot of times, the people who do R&D in higher institutes have difficulties finding the right partner companies to bring their innovations to market – there can be great opportunity for Canadian manufacturers to work with people who do R&D in the higher education sector. There are many programs where companies and higher education areas can work together for the benefit of both parties. If you have never thought about this as an option, it may be something to consider.
A lot of times the funding that you get from other programs don’t cover the same areas of business as the SR&ED program covers. In the instances where you are getting a grant, loan or reimbursement for something R&D related you need to remember one thing: you cannot double dip for funding. Some examples are as follows:
- If a funding program covers labour of those working on the same work that you would be claiming for the SR&ED program, then you would not be able to claim that labour – but you would still be able to claim the materials used, etc.
- If you’re getting funding from a program that covers equipment used for R&D, then you would still be able to claim labour, overhead, etc.
- And, if you’re getting funding from a program that covers marketing aspects, then that has absolutely no effect on your SR&ED claim, as marketing doesn’t qualify for the SR&ED program.
This past weekend, I went away on holiday. Or rather, I went away for four days of intense, overwhelming-to-all-the-senses, crazy obsessive fangirlish journey to San Diego. San Diego ComicCon 2010 was happening, and I was determined to have my first experience of the four-day-long scifi/comic book/etc convention.
And it was crazy, and awesome, and intense, and all kinds of brilliant.
One of the most exciting parts was walking around the exhibition floor, seeing all the different toy and collectible manufacturers with new products that they are bringing out in the near future. Some of these items will be available in the upcoming year, but some of them are just preliminary prototypes that the companies will be modifying and improving on before bringing out the finished products.
The process for manufacturing toys and collectibles, if you look at the basic steps, isn’t too different than manufacturing anything else. And having prototypes can be a great benefit to your Scientific Research and Experimental Development claim.
Developing a prototype is a part of the iterative process that SR&ED projects typically follow – design, prototype, testing, redesign, prototype, testing, and so on, until the final objective is reached. By keeping these prototypes that you have made, you have evidence for the CRA (should a review occur) that there was systematic investigation and experimentation done during your SR&ED project.
Many people get concerned when looking into the SR&ED program about how safe their trade secrets are. One of the key components of the SR&ED program is that you are faced with technological obstacles that don’t currently have any known methods to solving these problems – and in claiming for the SR&ED program, you’re going to need to cover how you overcame these obstacles. It’s only natural that you are going to be worried that what you worked hard to discover could be easily made known to your competition.
But the reality of the situation is that your trade secrets are safe and are kept completely confidential.
First of all, the CRA only looks as deep as it needs to, in order to discover whether your SR&ED projects qualify for the program – they only looks to see that there are technological obstacles, technological advancement and technical content. It isn’t always necessary for the CRA to look at the exact principles of your projects – when it is necessary, they maintain the strictest of confidentiality. In fact, the CRA has put rules and legislative precautions in place in order to protect your confidentiality.
If you are working with a consultant to prepare your SR&ED claim, your consultant should also maintain the strictest confidentiality with your technologies and intellectual property. If you have any concerns that these may not be the case, a standard non-disclosure agreement should be signed to the respect.
So, it is indeed a myth that your trade secrets aren’t safe when claiming for the SR&ED program, and this should not be a reason why you don’t consider filing for the SR&ED program.
There is no denying that Canada has one of the best programs as far as funding for companies that perform R&D goes. And while it is promoted frequently for Canadian Controlled Private Corporations, there are many other companies that can take advantage of this program.
Take, for instance, an American-owned company that has a branch in Canada. This Canadian branch manufactures custom products for its customers, and regularly has to work through technological obstacles to create the final product that was required.
Because this American-owned company has a branch that operates in Canada, and pays taxes to the Canadian government, this foreign-owned company would be eligible for the Scientific Research and Experimental Development program. Unlike privately-owned businesses, however, this foreign-owned company would be eligible to receive 20% of their claim in the form of tax credits. These tax credits can be applied retrospectively ten years, or can be applied forward three years.
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