Articles

Maximizing Government Funding and SR&ED

Federal and provincial governments have recently topped up existing funding and introduced new programs to incentivize businesses to develop environmental technologies, restore jobs, and sustainably scale up globally. The enviro-tech and environmental consulting industries can benefit from many direct funding programs that are targeted at achieving not only innovation and environmental technology development, but also business expansion (e.g., new geographic markets, product commercialization, or digital marketing) and human resources objectives (e.g., hiring and skills development).

With substantial funding being offered by all government levels, it is important to consider the following key issues when selecting potential grants and preparing applications:

  • Grant programs may have short intake windows and can often run out of money;
  • Eligibility criteria can be unclear or unpublished and can change without notice;
  • Obtaining funding is typically a competition against other applicants; and
  • Approval timelines can often be long.

Applicants can improve results and streamline the grant application process by integrating the following best practices into their approach to government funding:

  • Develop a 12-month business plan to align strategy, operations, human resources, marketing, research and development (R&D), and finance with the funding areas on which governments are currently focused;
  • Know your intake windows – timing is everything;
  • Target grants that are the best fit, rather than using a broadcast approach;
  • Uncover any unwritten criteria by speaking directly to intake staff for each program;
  • Be specific in your application about expected results of a project – think broadly, including any company, supply chain, industry cluster, societal, and environmental benefits; and
  • Choose effective references – letters of support can make a difference.

In addition to direct funding, Scientific Research and Experimental Development (SR&ED) tax credits are also an important source of funding. With $4.2 billion in SR&ED tax credits approved last year, SR&ED remains the single largest program funding R&D in science and technology in Canada.

However, SR&ED eligibility is often misunderstood, particularly in relation to environmental consulting. Examples of common misconceptions include:

  1. The belief that a business cannot claim SR&ED if it was paid to do some of the work. There are many scenarios where SR&ED can be claimed, even when it relates to paid work, such as when a company is hired to deliver an outcome or design and not specifically to do “R&D,” or when a company is hired by a non-Canadian firm. 
  2. Eligible projects need to revolutionize the industry or result in a patent. Eligible projects only need to establish incremental new knowledge for the company claiming the SR&ED tax credit. 
  3. Projects must be successful to qualify for an SR&ED tax credit. In fact, projects do not need to be successful. Indeed, failure can be a key indicator of SR&ED eligibility.
  4. It’s not possible or worthwhile to make an SR&ED tax credit claim if a company received direct funding in the form of government grants or COVID-19 wage subsidy relief (i.e., the Canada Emergency Wage Subsidy). However, there is typically only partial overlap between the various funding programs, making an SR&ED claim beneficial to the organization. Furthermore, strategies may be employed to apply grant funding in ways that reduce any overlap between programs and maximize eligible SR&ED expenditures.

Looking for more information? 

Use the link below to either request a copy of the presentation given by Ryan ULC on March 13, 2021, or to contact the presenters:

View Presentation