1. Funding for Technology Innovation & Growth
Craig Mulcahy
October 20, 2016

2. Presenter
Craig Mulcahy Advisory Services – Government Incentives BDO Canada LLP
Craig leads BDO’s Special Advisory Services Government Incentives Team in Atlantic Canada and specializes in providing professional services that assist clients with a comprehensive approach to funding Innovation and Growth.
With a focus on maximizing government grant and incentive opportunities for clients, the team’s primary expertise is related to the Scientific Research and Experimental Development (SR&ED) investment tax credit program for Canadian companies.

3. INCENTIVES in Canada How many programs are there?
In the 2012 Jenkins report
$ 7 Billion on 60 major Federal government programs
Spread across 17 different departments
When you add in provincial incentives
523 active programs in Canada (*60 new)
150+ active programs in Atlantic Canada (*3 new)
Each program may have regional specific variations!
Message: although there is $7 bil in available funding, it is spread across of a network of programs, each with their own requirements
There are programs that apply to businesses in all provinces and territories, and others that apply only to businesses in your region.
Many are competitions (best applications win).
Many are funded on a year-to-year basis and most have hard deadlines.

4. Grants, contributions and financial assistance Loans and cash advances
FUNDING FOR TECHNOLOGY INNOVATION & GROWTH What kind of help can I get?
Grants, contributions and financial assistance
Loans and cash advances
Loan guarantees
Wage subsidies
Equity investments
Tax refunds and credits
A “recoverable” grant means it is more like a loan
An “expenditure matching” program means you spend first
Understand the Mechanism – Only tax credits are “un-capped” in terms of number of successful applicants. Many others are competitions (best applications win). These are funded on a year-to-year basis and most have hard deadlines,
Most require an HST number.
Many require a business plan and sales forecast
Some require technical/technological arguments
Some are linked to your taxes (T2)
Some require audited books & references

5. GOVERNMENT INCENTIVES FOR TECHNOLOGY INNOVATION & GROWTH 5 Funding Pillars
Resources
Expansion
Global Growth
Environment
New Products & Processes
Hiring & Training
Facilities &
Equipment
Export Market Development
Sustainability & Energy Efficiency

6. Federal Budget 2016 Building a More Innovative Country
CREATIVE AND ENTREPRENEUARIAL CITIZENS
Skilled entrepreneurial and creative innovators
Highly qualified personnel and researchers
Industry-relevant education and training opportunities
Skilled, globally connected immigrants
Key Federal Tools
Support for internships and youth work experiences such as apprenticeships, immigration policy
SCIENCE AND TECHNOLOGY
Leading-edge research, both discovery and applied, conducted post-secondary and other research institutions
Access to well-equipped laboratories and research facilities
Dissemination of discoveries and mobilization of knowledge into applications
Key Federal Tools
Granting councils, federal laboratories, support for the Canada Foundation for Innovation and Genome Canada
INNOVATION INFRASTRUCTURE
Access to commercialization organizations and institutions
Business advice to promising firms delivered through accelerators and incubators
Networks and clusters of researchers, innovative firms, capital and mentors to connect novel ideas to the market place
Key Federal Tools
National Research Council, Industrial Research Assistance Program, Regional Development Agencies
SUPPORTIVE BUSINESS ENVIRONMENT FOR COMMERCIALIZATION & GROWTH
Strong capital markets with a risk appetite to support commercial breakthroughs
An efficient tax system that encourages innovation, trade and the growth of Canadian businesses
International market access for Canadian goods and services
Key Federal Tools
BDC, EDC, Trade Commissioner Services, trade agreements
Inherent to all 4 pillars is Support for Technology related to Sustainability and Export Capabilities

7. Federal Budget 2016 Investing in Infrastructure
Phase 1:
Infrastructure investments to modernize and rehabilitate:
public transit,
water and wastewater systems,
provide affordable housing,
protect existing infrastructure from effects of climate change.
Phase 2:
Infrastructure plan with broader and more ambitious goals:
a more modern, cleaner economy;
a more inclusive society;
an economy positioned to capitalize on global trade.

8. Federal Budget 2016 Investing in Infrastructure – Phase 1 Spending
Plan proposes to provide $11.9 billion over five years - starting right away:
$3.4 billion over three years to upgrade and improve public transit systems;
new Public Transit Infrastructure Fund.
$5.0 billion over five years for investments in water, wastewater and green infrastructure projects across Canada;
new Clean Water and Wastewater Fund
$3.4 billion over five years for social infrastructure.
including affordable housing, early learning and child care, cultural and recreational infrastructure, and community health care facilities on reserve.

9. Federal Budget 2016 Phase 1 – Canada’s New Infrastructure Plan

10. GOVERNMENT INCENTIVES FOR TECHNOLOGY INNOVATION & GROWTH 5 Funding Pillars

11. Innovation SCIENTIFIC RESEARCH & EXPERIMENTAL DEVELOPMENT (SR&ED)
Designed to encourage Canadian businesses to conduct R&D in Canada to develop new, improved, or technologically advanced products or processes.
Eligible Expenditures may include:
Salaries and wages
Materials
Sub-contractors
Overhead costs
Third party payments to other research entities, including universities
Rate of returns are up to 68.41% on salaries and wages, 44.13% on materials, and 35.31% on SR&ED contracts. (qualified CCPC’s)
As of 2014 — does not cover capital (equipment) purchases or lease costs

12. Innovation SR&ED Technical Eligibility Rules
SR&ED Eligibility Criteria:
Technological Uncertainty
Scientific Method & Technical Content
Technological Advancement

13. Innovation CRA’s 5-Step SR&ED Project Review Approach
Identification of the subject matter of the problem.
Formulation of a clear objective.
Identification and articulation of the technological uncertainty that is the root cause of the problem (What is it about the technology that won’t allow you to do what you want to do?).
Formulation of a hypothesis or hypotheses aimed at removal of that uncertainty.
Systematic testing of those hypotheses using scientific method

14. Innovation What is it Worth?
Expenditures for SR&ED conducted in Canada may include wages, materials, some overheads, SR&ED contracts, and third party payments
Deduct current and capital SR&ED expenditures to reduce tax liability in current year or carry these expenditures forward indefinitely to reduce your tax liability in future years.
Receive Investment Tax Credits (ITCs) on qualifying expenditures through a reduction of taxes payable. The unused investment tax credits can be carried back 3 years, or forward 20 years.
Some CCPC corporations qualify for a refundable credit
Various corporation types get varying amounts with some getting refunds
Eligible CCPCs receive 35% Federal investment tax credit on eligible expenditures
All others 15% Federal Investment tax credit on eligible expenditures starting 2014
Additional benefits in provinces (10 to 20% on SR&ED expenditures)

15. Technology NRC Industrial Research Assistance Program (IRAP)
Proposal before work is performed
Work to a schedule, monthly reports are filed
Expenses incurred are “matched”
Commercial aspects are critical
Credibility and reliability of your company and team
Financing to cover up to 75% of eligible costs, if you are seeking more than $500,000 and up to $3 million.
Contributions are conditionally repayable based on the commercial success of your project.
To qualify, your project must be scientifically and/or technically sound
Must show that your product can be commercialized, and you can manage the project
ACOA Atlantic Innovation Fund (AIF)
Note that $270M a year is given out via tax credits.
36M…

16. Innovation Automotive Supplier Innovation Program
Funding up to $10 million as a non-repayable contribution for technology projects that develop innovative products or processes. This can cover up to 50% of eligible costs to undertake early-stage basic research and pre-commercialization activities:
Prototype development
Product and process engineering
Pre-commercial product and process testing and validation
Eligibility:
Incorporated and carry on business in Canada
Have fewer than 500 employees globally

17. Innovation Strategic Aerospace and Defence Initiative (SADI)
Rewards Canadian corporations that perform R&D in the aerospace, defence,
space or security industries.
Funding for up to 40% of project costs.
Conditional or Unconditional Repayable contributions
Eligibility:
Creates opportunities to contribute to a highly skilled and knowledge-based workforce
Involves industrial research
Includes strategic R&D activities
Requires support essential to its location, scope and/or timing
Has R&D that takes place in Canada
Involves collaboration with academia in Canada

18. Innovation DAIR – Cloud Computing Resources
Digital Accelerator for Innovation and Research (DAIR) leverages Canada’s investment in the CANARIE national backbone research and education network to accelerate product development and market competitiveness of small and medium-sized Canadian companies.
Free self-serve access to 4 virtual servers

19. Innovation Build in Canada Innovation Program (BCIP)
Helps Canadian companies bridge the pre-commercialization gap by giving them their first referenced sale and allows for the testing of late stage innovative goods and services within the federal government before taking them to market
Funding for up to $500,000 per innovation
program funding is $30 million
Eligibility:
Innovative product/service in one of the 4 standard priority areas (Environment, Health, Enabling Technologies, Safety & Security)
Not have been sold commercially
Be provided by Canadian bidders
Include 80% Canadian content
Show IP ownership or rights
Obtain minimum pass marks for “Advance on State of the Art”

20. TECHNOLOGY Collaborative Research Funding in Canada
Sponsor
Grant
About
Natural Sciences and Engineering Research Council of Canada (NSERC)
Collaborative Research and Development Program (CRD)
To support focused, long-term research projects conducted jointly by academic researchers and private sector partners.
Funds provided on a yearly basis, 1-5 year term.
Focus is on new technology.
NSERC
Applied Research and Development Grants (ARD)
To provide Canadian companies access to Canadian colleges’ expertise and knowledge and to train students in essential technical skills.
Funds provided on an annual basis and program can last for up to 3 years.
Company matching required with minimum amounts as cash.
Engage
Funds a 6 month R&D project with a university or college expert to find solutions addressing a specific, short term challenge. Funding is up to $25,000.

21. TECHNOLOGY Collaborative Research Funding in Canada
Sponsor
Grant
About
MITACS
Accelerate
Connects companies and other organizations with the vast research expertise in Canada's universities.
Graduate students and postdoctoral fellows work on business-related research challenges at the company and on campus.
$15,000 program (50%/50% cost split) and can be clustered.
Elevate
Two-year training program for postdoctoral fellows, to lead and undertake an industrially relevant research project including time in the industrial environment.
MITACS provides minimum $50,000 stipend per year to the fellow.

22. GOVERNMENT INCENTIVES FOR TECHNOLOGY INNOVATION & GROWTH 5 Funding Pillars
Global Growth

23. Export Growth Program (NSBI)
GLOBAL GROWTH
Export Growth Program (NSBI)
The Export Growth Program provides financial incentives for projects that assist your business in overcoming barriers to export growth, such as accessing customized expertise, supporting travel to market, and mitigating the costs of attending events like trade shows and conferences. The Program contributes up to 50% of eligible costs associated with the execution of strategic business initiatives that are linked to your business' export market growth plan to a maximum of $15,000. There are ongoing intakes commencing upon completion of Stream One and ending in January. There are four application intake periods for the Export Growth Program. The final intake period for the program is:
Intake Four: January 15, 2017

24. Small Business Development Program (NSBI)
GLOBAL GROWTH
Small Business Development Program (NSBI)
The Small Business Development Program provides financial incentives on projects that assist your business to: participate in a global supply chain; become a first-time exporter; remove barriers to exporting; or grow current exports by assisting your business with access to customized expertise. The Program contributes up to 50% of eligible project costs to a maximum incentive of $15,000 per fiscal year. There are four application intake periods for the Small Business Development Program. The final intake period for the program is: Intake Four: January 15, 2017

25. GLOBAL GROWTH Export Financing
Sponsor
Program
About
EDC
Export Guarantee Program
Help you secure financing from banks with a government guarantee on your export-related activities or foreign investments.
Foreign Buyer Financing
Can provide guarantees or loans to your international customer so they can buy your product.

26. ACOA Business Development Program (BDP)
The Business Development Program, is ACOA’s Flagship program for providing financial assistance to SME’s in Atlantic Canada
Loans up to $500,000 that are:
Interest free
Unsecured
Flexible/Provisionally repayable
Eligible Activities
New Establishment, Modernization or Expansion
• Capital Acquisition, Marketing, R&D, Training, Productivity/Quality Improvement

27. ACOA Productivity and Business Skills (PBS)
The PBS programs objective, is to encourage small- and medium-sized enterprises (SMEs) to improve their competitiveness by improving their technical skills, commercialization skills, and management skills
Funding is provided in the form of non-repayable grants up to a maximum contribution of $100,000 per company
ACOA will contribute 75% of project costs (maximum of $50,000 per project)
Eligible Activities
Support for ISO Certification
• Specialized training for employees
Hiring of external consultants
Business plan preparation
Hiring skilled employees (i.e. Business Development/Marketing Manager, Quality Control Manager, Technical Positions)

28. WIPSI
The Workplace Innovation and Productivity Skills Incentive (WIPSI), an initiative of the Canada-Nova Scotia Job Grant, provides eligible employers with a funding incentive to invest in employee skills through workforce training
• Stream 1: Small business/social enterprise and revenue-generating not-for-profit (50 or fewer employees)
• Minimum application $5000
• $5,000 to $10,000:
- No cash contribution is necessary with respect to the applicant’s first application per fiscal year.
• Over $10,000:
- Applicants are required to contribute 50% of eligible costs that exceed $10,000.
- Maximum WIPSI contribution is $10,000 per employee.
Stream 2: Medium & large businesses/social enterprise and revenue-generating not-for-profits (More than 50 employees)
• Minimum application $10,000.
• WIPSI contribution is 50 % of eligible costs.
• Maximum WIPSI contribution is $10,000 per employee.

29. 80 + 11 Regions 20 Offices ACOA 2 BDO National Team Scientists,
Technicians,
Bio Researchers,
Software Programmers
Chemists
Engineers,
PhDs, &
Financial Professionals
11 Regions
20 Offices

30. Craig Mulcahy cmulcahy@bdo.ca
QUESTIONS
Craig Mulcahy