Election Alert - Support the CATA Innovation Platform: Call to Action for Adopting the SR&ED Core Plank
September 17, 2008

The increasing focus of the Federal election 2008 on the deteriorating economic conditions and competitive position of Canada provides us with the opportunity to bring home the ineffectiveness of current federal support for innovation and commercialization and the need for the next Government to address the fundamentals and get it right.

The SR&ED tax credit program is close to a $ 4 billion commitment to innovation that a very significant portion of its larger claimants find problematic according to the CRA's own client survey. The problem is further illustrated in a CATA release, Industry Survey Says Canada's SR&ED Program Not Working the Way It Should.

How effective it could be and the impact, both positive and negative, of current CRA practices need to be communicated to candidates.

CATA's National Spokesperson, Terry Matthews, in a recent white paper, The Challenge of Survival for Canada's ICT Sector, lays out the issues and the weakness of the current system of support for Business Innovation. If you are speaking with candidates and their supporters, it is important to explore the issues with them.

Core Plank

The CATAAlliance believes that we need a Government willing to move aggressively to a new more fully integrated, less piecemeal system of support for Business Innovation. A system that strongly promotes investments in early stage technologies and that sees that Canadians can capitalize on our creativity and grow our technology businesses into fully mature internationally competitive companies.

You may wish to emphasize:

  • the significance and consequence on your region of the loss of Canadian technology and your region's seasoned technologists as local firms have been acquired offshore;
  • the short- and long-term impact of the loss of opportunities on the pipeline of new IT professionals. In today's environment, some IT programs simply cannot find interested talent.
  • the need for rethinking of our current tax system and the CRA's management of it as both are real impediments to:
    1. Canadian investors wishing to support early stage companies, let alone foreign investors; and
    2. investment in leading edge technologies where our technologies have matured and need updating.
     
  • your strong support of the R&D tax credits when they work as an incentive, but that the current system is not managed so that it delivers true incentives for many claimants even after years of attempts by the CRA to do so. If you have experience with the regionalization and individualization of the program you may wish to discuss the impacts.

Some members are suggesting that the CRA's treatment of claims is currently becoming more problematic.

++ Call to Action: Talk with candidates

Explain the real, short- and long-term consequences of inaction.

Obtain their commitment to:

  • establish a new business framework for investment in innovation, not simply to study the problem; and
  • work with the CATAAlliance and the business community to achieve a viable framework to promote innovation in Canadian Businesses.

If you have an opportunity or opportunities you would like to discuss with us, please give Russ Roberts, Sr. VP of Tax and Finance for CATA, a call at 613-290-2911 or e-mail him at sredcomment@cata.ca

John Reid
President, CATAAlliance
jreid@cata.ca