Until “innovation” becomes a standard line item in a CIO’s budget, the best recourse for Canadian IT leaders may be a federal tax incentive that could help them cover the costs of potentially groundbeaking initiatives.
Last month the CIO Association of Canada held an information session for its members about the Scientific Research and Experimental Development (SR&ED) program. SR&ED offers cash refunds or tax credits for R&D work done in Canada, if it meets the various criteria. Though it is considered the largest source of federal support for research and development, there have been concerns for years that SR&ED is under-utilized.
Arik Kalininsky, a CIO Association of Canada board member who has been leading the dialogue between Canada Revenue Agency (CRA) and its members, said the recent meeting reflected a recognition that what gets submitted for SR&ED by CIOs and other technical decision makers may not be properly understood by those processing claims.
“Something is lost in the translation,” Kalininsky said. “The CRA is interested in dispensing tax credits properly. It’s obviously not to their advantage to turn (CIOs) down. They want to be in a position to accept the claimant. Ultimately, they’re interested in achieving innovation in Canada.”
Kalininsky said he has met with some peers who have worked through the SR&ED program “but, for the most part, not very successfully.” There are others, though, whom he said were not very aware of the program and the impact it could have on their IT budget, either through a cash injection or a tax credit afterwards.
Earlier this year, the CRA launched an online Self-Assessment Learning Tool (SALT) the First-Time Claimant Advisory Service (FTCAS). Kalininsky said the FCTS gives CIOs can opportunity to have the CRA look at their submission ahead of time and get feedback on whether they need additional documentation or what else they might need to present. Though this stage won’t guarantee what kind of money they’ll get back, he said it could provide much greater assurance around the likelihood of a successful claim.
“It’s a golden opportunity to do this with their advisors in real time, rather than waiting until the end of your fiscal year,” he said. “You’re gaining the ability to forecast the eligibility of your project against SR&ED, to begin to forecast the credits and what they can bring to your project.”
The CRA has left a presentation following the event that will be available to CIO Association of Canada members. Meanwhile, the association is also working with CATA Alliance to explore how its members can benefit from the $200 million Business Development Bank of Canada (BDC ) will invest to support small and medium-sized businesses with digital technology adoption. In addition to this, BDC will also invest $300 million in venture capital for IT tech firms, as outlined in the Digital 150 strategy.