Tax credits and grants
Canada’s single largest R&D incentive is the Scientific Research and Experimental Development (SR&ED) Tax Credit program. Canadian companies can earn an investment tax credit of 35% on the first $3 million in qualifying expenditures, including salaries, capital, consulting fees and materials. The tax credit stands at 15% for amounts above $3 million. For most companies, these credits take the form of a cash refund.
In addition to the federal tax credit, every province and territory, with the exception of Prince Edward Island, Nunavut, and the Northwest Territories, provides a tax credit for qualified SR&ED conducted in its jurisdiction.
The federal government and the provinces also offer additional help through grants and industry specific government programs.
Collaborate with research institutions
Your company might be able to partner with a post-secondary institution on specific projects. The Natural Sciences and Engineering Research Council (NSERC) has a full range of programs that allow you to collaborate with these institutions for half the cost of the project or an in-kind contribution.
- The Engage Grants allow you to conduct a six-month R&D project in exchange for an in-kind contribution.
- The Applied Research and Development Grants allow you to work with a college or university research term for an R&D project of up to three years. You pay for one-third to half the costs of the project in cash or with in-kind contributions.
- You can conduct a long-term R&D project with the Collaborative Research and Development Grants or the Industrial Research Chairs, under which you pay one-third to half the cost of the project with cash contributions.
If you’re looking to apply for the Research Partnerships Program, you should begin by contacting NSERC. You will also have to find a researcher or research institution with whom you want to collaborate.
Another popular program is the National Research Council’s Industrial Research Assistance Program, which provides advice, technological expertise and research funding through a network of professionals working in communities across the country.
If you do business in the health sector, the Canadian Institutes of Health Research’s Industry-Partnered Collaborative Research Program could provide funds for you to collaborate with research institutions in health R&D. The maximum grant for this program is $250,000 per year for five years.
High-end brains at a low cost
Personnel and wage costs often end-up being the most expensive part of R&D projects. One solution: Mitacs.
The Mitacs Accelerate program allows you to expand your R&D program for an investment of $7,500. With the help of a government matching grant, you’ll be able to hire a graduate student or post-doctoral fellow for a four-month internship. The intern remains a student at the university, meaning you do not have to manage the financial and administrative issues of hiring a new employee.
The program can also scale up through the Accelerate Cluster projects, where a team of three or more interns will address a research goal in cooperation with your company. You will need a minimum of six internships to create a cluster at a cost of $36,000 ($6,000 per internship), which is matched with a $44,000 grant from Mitacs. There is no upper limit on the number of internships you can offer.
Another option? The NSERC’s Industrial Undergraduate Students Research Awards will help you hire undergraduate students for a 16-week period to increase your productivity or R&D capacity. As a business owner, you pay 25% of the student’s salary ($1,125) for the 16-week placement.