GRANTS & INCENTIVES. Funding Innovation & Growth. March 28 7, 2018 PRESENTED BY RICHARD BURDENIUK

Transcription

1 GRANTS & INCENTIVES Funding Innovation & Growth March 28 7, 2018 PRESENTED BY RICHARD BURDENIUK

2 GRANTS & INCENTIVES PRESENTATION OUTLINE Story on Canada s funding programs Types of programs and the tools to find them What s new in the Federal Budget 5 new ways to identify programs you may have missed Specific Programs & Details 2

3 GRANTS & INCENTIVES What s the story? In the 2012 Jenkins report on incentives found: 60 major Federal government programs Spread across 17 different departments spending $7B In 2017 this number had grown; when you add in provincial incentives: 513 active programs in Canada 151 active programs in Ontario In 2018 the Federal budget consolidates increases spending consolidates many Federal programs (92 to 35) How do we cover them all in 30 minutes? 3

4 GRANTS & INCENTIVES 4

5 SO WHAT S THE PROBLEM? 5

6 GRANTS & INCENTIVES 6

7 GRANTS & INCENTIVES HOW YOU ACCESS THE FUNDS? 70% Tax Credits Look Back Entitlement Deferred Benefit 23% Grants & Incentives Look Ahead Competitions Matching 7

8 TAX CREDITS ARE EXPENDITURE RECOVERY BASED $20 $15 $10 $5 $20,000 with a burn Rate of $1000 Tax credits pay out after your fiscal year end $0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Cash Recovery 8

9 GRANTS CAN BE FREE OR NEARLY FREE BUT MOST ARE EXPENDITURE MATCHING IRAP CMF OIDMF etc are all expense matching $20 $15 $10 $5 $0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep 50% matching expenses starting in May, totaling the same $7, month runway is extended the same 7 months Cash Recovery 9

10 TYPES OF DIRECT FUNDING Grants, contributions and financial assistance Loans and cash advances Loan guarantee Wage subsidies Equity investments 10

11 DIRECT FUNDING FIVE MAIN BUCKETS OF WHY Technology Development Hiring & Training Business Expansion Export Market Development Sustainability & Energy Efficiency 11

12 FEDERAL BUDGET 2018 PROGRESS INNOVATION AND SKILLS PLAN 12

13 FEDERAL BUDGET 13

14 FEDERAL BUDGET 14

15 TIPS + TRICKS TO MAKE GRANTS WORK FOR YOU: Select only the grants with the very best fit for your company - future growth plans, alignment with your strategy, timeframe, your capacity to invest Talk to the funders - but understand what matters to them first Be specific about expected outcomes and outputs Make constructive use of project plans and milestones Integrate grants into your overall funding and financing strategy 15

16 GRANTS AND INCENTIVES Identifying Additional Programs All monetary incentives are designed to encourage specific behavior; they are targeted at different characteristics of your business: 1. Types of Products 2. Technology related to your Product 3. People who produce the Product 4. Location of your Business & Customers 5. Stakeholders 16

17 INCENTIVES IN CANADA 1. Product Industry Specifics Ontario Media Development Corporation (OMDC) tax credits and funds Film, Animation, Video Production, Book and Interactive Digital Media (40%) Agri & Agrifood, SDTC Cleantech, GhG 17

18 INCENTIVES IN CANADA 1. Product Telecom Specific SWIFT (Southwestern Integrated Fibre Technology) POP focused, applications are closed, construction underway Addresses quality of living & business competitiveness Make last-time connections for ISP s more affordable OMAFRA RED Rural Economic Development Apply on behalf of not-for profit, municipality, service board, community between July 30 th to September 2018 to Stimulate economic growth Up to 50% of project costs capped at $100,000 for Planning & Implementation Linkage with longer term outcomes, alignment with priorities Last Business led application Jan % capped at $1M 18

19 INCENTIVES IN CANADA 1. Product Telecom Specific Who s getting funded? $22M Top 50 *July 19 th 2017 Globe & Mail Funding Portal #5 - MDA Systems LTD - $54M satellite tech #21 Xplornet Communication - $12.5M #29 Pravala Networks -$9.7M vehicle connectivity #31 - Eeyou Communication Network - $8.3M network expansion #34 - Manitoba NetSet LTD - $7.9M network expansion #29 Commstream gigalinks Inc. $5M CRTC new funding July 2018? 19

20 GRANTS & INCENTIVES Type 1. Product Build in Canada Innovation Program (BCIP) Helps bridge the pre-commercial gap by awarding contracts up to $500,000 Government becomes your first customer, and provides feedback and validation Priority Areas: Environment Safety and security Health Enabling technologies Military technologies Innovative Solutions Canada Modelled on US Small Business Innovation Research Challenge & Procurement Based 20

21 GRANTS & INCENTIVES 2. Technology related to your product Who proves that It actually works? SR&ED is an indirect tax credit program, est. $3.5B IRAP is a direct program, est. $750M 21

22 INCENTIVES IN CANADA 2. Technology related to your product - Technology Readiness Level (TRL) 22

23 INCENTIVES IN CANADA 2. Technology related to your product 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, as is your credibility and reliability $20 $10 $0 Jan Apr Jul Oct Jan Apr Jul 23

24 SCIENTIFIC RESEARCH AND EXPERIMENTAL DEVELOPMENT - SR&ED THREE CRITERIA separate SR&ED from R&D Technological Uncertainty Systematic Investigation *not routine *not ad-hoc Technological Advancement *not trivial An SR&ED Project is a subset of your R&D Project Requirements Gathering Development Development Testing User Acceptance Testing 24

25 INCENTIVES IN CANADA 2. Technology in your Product - Scientific Research & Experimental Development 25,000 applicants a year has fallen to as low at 15,000 70% of applicants use a professional to assist in preparing the claims Starting in 2012 through 2014 new CRA documents linked SR&ED to the scientific method. Defining a problem that cannot be resolved with the information available to you Advancing a plan or theory to resolve that problem, Testing and refining the hypothesis with experiments or analysis, Using that knowledge to build better methods and techniques 25

26 INCENTIVES IN CANADA Best Case Recovery Rates for R&D Tax Credits For fiscal year end 2018 ITEM SALARY MATERIALS Federal (35%) + Ontario ITC (8.5 % + 3.5%) Enhanced Rate of Return Enhanced rate is available to Canadian-controlled private corporations (CCPC), under Taxable Income (TI) and Taxable Capital (TC) limits Gross credits generated in a best-case scenario No Proxy Cap A portion of the credits are non-refundable. 66% 42% 34% Large Corporation 26% 18% 14% SUB- CONTRATORS 26

27 INCENTIVES IN CANADA SR&ED within a Company Project Income Tax Act: Section 248 In a field of technology Accounting Software XML Parsing, VOIP metering Support Work 27

28 INCENTIVES IN CANADA SR&ED Descriptions 28

29 INCENTIVES IN CANADA SR&ED Evidence Checklist CRA requests the top 5 pieces of information that are available to support the specific documentation checked on the T661 Part 2 Section D: 29

30 INCENTIVES IN CANADA 3. People - Who produce the product Youth Employment Program (YEP) 50% up to $30,000 of post-secondary graduate s salary; for work on an innovative technical project Additional $448.5 million over five years to the Youth Employment Strategy. Co-operative Education Tax Credit Refundable tax credit, 30% capped at $3,000 per 4m term. Canada Job Grant Training must be provided by an external trainer (public or private institution) The government funds up to 2/3 or $10,000 per person for tuition and training materials Less than 50 employees allows for some salary cost contribution 30

31 INCENTIVES IN CANADA 3. People - You collaborate with MITACS Cost-sharing for access to PHD and other academic resources; typically an investment of $15,000 per year NSERC & OCE Many programs to facilitate and pay for collaboration with Intuitions, Universities, and Colleges Finance commercialization Resolve technical problems Reduce your cost of hiring skilled professionals License innovative intellectual property Access expert advice Improve your business skills 31

32 INCENTIVES IN CANADA 4. Development of International Business Background - Available once you have $200,000 to 500,000 in sales and employees. Benefit - Grant covering up to 50% of project costs; ranging from $5,000, to $50,000 per application, with many applications per year. Four areas are eligible for funding: 1. Direct contacts 2. Marketing tools 3. Market research 4. Foreign bidding projects 32

33 WHO WE ARE Our National Incentives Team 80+ Professionals Regions Offices Including: Scientists Technicians Bio Researchers Software Programmers Chemists Engineers PhDs Financial Professionals 33

34 FEDERAL BUDGET AGENDA FOR SUSTAINABLE DEVELOPMENT 34

35 QUESTIONS? 35

36 INTRODUCTION RICHARD BURDENIUK Senior Manager, Advisory Services Practice Direct: (905) Richard Burdeniuk leads the GTA s Technology, Media & Telecommunications team in BDO s Consulting & Advisory Services. This team specializes in government incentive programs, that fund growth and innovation. Richard worked in the telecom space before entrepreneur efforts raising capital in two ventures that developed software technologies for quality of service monitoring, distributed computation, image processing. Richard s experience in private sector business led research and development led him to government funding programs. His experience in private sector entrepreneurship helps him appreciate an owner s bottom line while also applying the scientific know-how to work with funders, accountants, and lawyers. He has spent 12+ years helping companies access various tax credits and grants. Canada s SR&ED program is one of the more controversial CRA programs and he has participated in policy development and tax court. 36

37 MEANINGFUL FINANCIAL DASHBOARD REPORTING 37

38 FOUNDER BUNDLES launchme fundme growme saveme exportme Help with starting a business Help attract capital Help with growth Help with year-end compliance Help with expanding into new markets Entity Formation Founders Agreements Domestic Tax Consultation Payroll Bookkeeping Business Plan Review Market Research Microsoft Business Intelligence Wealth Advisory Consultation Minute Book Maintenance Quarterly Meetings 38 Government Incentives Consultation Incentive Program Review Government Incentives Filing Program Assessment Financial Modelling Business Plan Review Wealth Advisory Consultation Minute Book Maintenance Quarterly Meetings Financial and IT Health Check Government Incentives Consultation GI Program Assessment Payroll Bookkeeping Market Research FINTECH: IT Regulatory Readiness Microsoft Business Intelligence Wealth Advisory Consultation Stock Option Advisory 409A Valuations Minute Book Maintenance Quarterly Meetings Financial Health Check Immigration Services Tax Compliance Founders Agreements Compensation Agreements Draft/Review Contracts FINTECH: IT Regulatory Readiness Wealth Advisory Consultation Minute Book Maintenance Quarterly Meetings Immigration Services International and US Tax Consultations Tax Return USA Expatriate Tax Services Market Research Business Plan Review Wealth Advisory Consultation Minute Book Maintenance Quarterly Meetings