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How to invest in R&D for less

Imagine paying only 17 cents on the dollar to develop a new product or service. If that doesn't get your attention, how about a half-price deal on highly-skilled graduate students?

There are many enticing incentives for small companies to get involved in research and development (R&D). National and provincial programs abound to make it easier for small and mid-sized businesses — the lifeblood of Canada's economy — to do what they do better by tapping into the top-notch researchers and state-of-the art equipment found in our universities.

Canada's single largest R&D incentive is the Scientific Research and Experimental Development (SR&ED) tax incentive program. Canadian companies can earn an investment tax credit of 35 percent of qualifying expenditures, including salaries, capital, consulting fees and materials. For most companies, these credits take the form of a cash refund.

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 260 professionals working in 100 communities across the country.

The Natural Sciences and Engineering Research Council (NSERC), Canada's largest research granting agency, will pay up to $30,000 a year over two years towards the salary of a recent doctoral graduate.

Companies can also partner with a university on a specific project. NSERC contributes 50 percent of the cost and the industry partner puts in 25 percent in cash and 25 percent as an in-kind contribution. When the SR&ED tax credit is factored in, it costs companies 17 cents on the dollar to conduct research.

"The first step is for companies to contact us early so we can guide them to a specific project or perhaps an industrial research chair. By the time they get through working with our staff, the success rate for funding applications is in the 80 percent range. This is a terrific opportunity for small businesses," says Janet Walden,
Vice-President of NSERC's Research Partnerships Programs.

Interest in NSERC's partnership programs has been rising significantly. From 1998-2007, it experienced 254 percent growth in the number of small businesses participating. NSERC has also partnered with Business Development Bank of Canada and the National Research Council to transform promising research into actual products.

"If you've got a good research project that can involve a university, and the industry is committed in terms of financial, human or in-kind contributions, then we'll find a way to make that work," adds Walden.

The Canadian Trade Commissioner Service also has funding programs to help companies expand into global innovation networks. The Going Global Innovation (GGI) initiative stimulates international R&D partnerships and the International Science and Technology Partnerships Program (ISTPP) supports international collaborative R&D activities with Israel, India, China, and Brazil.

Find out about Canada’s international science, technology and innovation relations, including our formal science and technology agreements and how they can benefit Canadians. Check out updates on calls for proposals for industry-led collaborative R&D projects with specific countries and information on Canada’s national strategies and priorities.

For more information, go to Scientific Research and Experimental Development (SR&ED) Tax Incentive Program website, Natural Sciences and Engineering Research Council of Canada website, Industrial Research Assistance Program (IRAP), and the Canadian Trade Commissioner Service website.

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