MCN


Innovation and the 2017 Budget

We thought we would try something different this year. A lot of really good articles have been written about the 2017 Canadian Federal Budget. Rather than highlighting key points like in previous years, we’ve decided to refer you to those articles that provide a good explanation of key points of the budget. Betakit has done an excellent job itemizing the key funding points in the 2017 budget. http://betakit.com/budget2017-calls-for-950-million-towards-superclusters-national-ai-strategy/ The budget has announced increased funding for accelerators and incubators, somewhat controversially. Here is a great counterpoint on the need for funding more business incubators. http://www.theglobeandmail.com/report-on-business/small-business/startups/tech-leaders-question-the-need-for-more-funding-for-business-incubators/article33631229/ Much has been made about the new support for AI and related technologies in the budget. This money will primarily be handled by the Canadian Institute for Advanced Research (CIFAR). Little known outside of academic circles, heres some more information about how CIFAR will use government money to advance AI, as seen through their pre-budget consultation. http://www.parl.gc.ca/Content/HOC/Committee/421/FINA/Brief/BR8398149/br-external/CanadianInstituteForAdvancedResearch-e.pdf Speaking […]


Subcontractors and SR&ED ‘Loopholes’

Subcontractors who are Canadian (i.e. companies operating in Canada), or individuals in Canada hired on a subcontract basis and are performing SR&ED eligible work, can be claimed under the program. The difference between subcontractors and employees is simply the refund rate. Through the program, a higher return rate is applied to salaried employees versus subcontractors. There is another scenario involving subcontractors that people mistakenly think is a loophole to be exploited. In some cases, a company will hire a Canadian subcontractor (typically a company) to perform some SR&ED eligible development on their behalf. The Canadian subcontractor then outsources this work offshore. Some outsourcing companies present this as a way to win business as they can lower their costs to the client, while still allowing the client to claim SR&ED on their work. In fact, this is not a loophole, and is something that the CRA accounted for long ago. Through a directive, that […]


SR&ED and Due Diligence

In today’s blog post, we’ll look at the misunderstood role of due diligence and how it pertains to SR&ED. Due diligence is a critical component of the ‘Technological Uncertainty’ which is one of the three main criteria of the program. In order to establish that a technological uncertainty exists, an organization must perform some due diligence to determine if the uncertainty is readily solvable using available knowledge, or if no information exists. Without performing this critical step, it is not possible to establish a valid technological uncertainty. There are two main misconceptions we see regarding due diligence and SR&ED. First, due diligence is a required component of the program, however the time spent in performing this task is not eligible. The reason for this is that you must establish that a technological uncertainty exists before you can begin your systematic investigation and/or experimental development and your due diligence precedes the establishment […]