Much focus has been placed on government incentive programs because of the lagging indicators that show that Canada is falling behind in global innovation. Efforts have been placed on revamping the flagship Canadian programs such as Scientific Research and Experimental Development (SR&ED) and the Industrial Research Assistance Program (IRAP) to improve the commercialization of new technologies.
IRAP and SR&ED tackle commercialization from two different perspectives. Whereas IRAP is a grant program that funds selected projects, SR&ED is a tax credit that is reimbursed to companies that perform eligible R&D activities. Generally speaking, SR&ED is attractive to companies that are generating research and development expenses, whereas IRAP is more attractive for early-stage companies, especially those who have not begun to generate expenses yet.
SR&ED can provide substantial refundable tax credits to Canadian-controlled private corporations willing to take risks. The program incentivizes companies to continue to invest in research and development to stay competitive in the global market. Any corporation can file for SR&ED with their tax return, and have the application reviewed by the CRA.
IRAP, on the other hand, is a grant program that focuses on “picking winners.” Applications are submitted to the National Research Council (NRC) through an Industrial Technology Advisor. Successful applicants are selected for funding grants, based on the following criteria:
- Level of technical and commercial risk
- The economic benefit to Canada
- Management quality
- Increase of company R&D capability through the project
- Level of Commitment
- Consistency with national priorities
- The social benefit to Canada
- Contribution to regional development
- Advancement of scientific knowledge.
Many new companies have been jump-started as a result of the IRAP program. For example, Abydoz Environmental, founded in 1997, received IRAP funding to develop PhytoKlare as a practical water treatment option for homes and communities in Atlantic Canada. IRAP helped to fund a 35-home PhytoKlare Communal Treatment System in the southern Newfoundland center of Marystown, which included 2 treatment beds, made up of plants that eventually grew to 2 meters in height. This pilot project allowed Abydos to prove the technology and set them up for further commercialization through full-scale versions of the system.
It should be noted that IRAP and SR&ED can work together to assist companies to bring technology to market. In the Abydoz example, although IRAP was used for the pilot project, the SR&ED program might become invaluable during their future full-scale developments of the PhytoKlare system.