Funds from the federal government’s Scientific Research and Experimental Development (SR&ED) tax incentive program that have not been released due to the COVID-19 pandemic are now starting to flow.
“It might just buy them enough time for the federal government to get the 75 percent wage subsidy right.”
The COVID-19 crisis reportedly delayed nearly $200 million in tax credits for tech companies after the Canada Revenue Agency (CRA) paused business auditing as it moved to remote work. This meant companies not yet audited were ineligible to receive the funds.
In a LinkedIn post late last week, Bryan Watson, partner at Flow Ventures and former council member of the Canadian Advanced Technology Alliance (CATA), confirmed that some of the backlogged SR&ED credits are starting to reach companies. In the post, he noted that Russ Roberts, senior vice president of tax, finance, and advocacy at CATA, recently spoke with leaders at the CRA who told Roberts the agency is looking to expedite the processing of claims.
Last week, The Logic reported that Kitchener-Waterloo company Encircle received confirmation that its SR&ED money was coming. Watson also confirmed to BetaKit in a recent interview that several Quebec companies have received SR&ED funding, although SR&ED is handled internally by the province of Quebec, rather than by the federal government.
SR&ED provides financial support in the form of tax credits or refunds to corporations, partnerships, or individuals who conduct scientific research or experimental development in Canada. Watson noted this is one of the few federal programs that most tech companies in Canada are eligible for in the age of COVID-19.