Alarm Bells Sounding Over Rumoured SR&ED Changes

It’s widely assumed that Prime Minister Harper and his Conservative government will announce changes to the long-standing Scientific Research and Experimental Development Tax Incentive Program (SR&ED) as part of their March 29 budget.

Harper has received recommendations from an expert panel’s report—known as the Jenkins Report after its chair Tom Jenkins—which made six broad recommendations to streamline a bewildering array of programs and produce more marketable business products from R&D funds.

One of the Jenkins Report recommendations has a lot of people worried: “Decrease spending through a flagship R&D tax credit for small businesses in favour of direct support to help these companies grow faster and become more competitive.”

While it is still uncertain how the Federal government will act on this advice, Harper said in December the dismal results of the existing R&D system is a significant problem that he plans to fix.

The notion of altering the SR&ED program is setting off alarm bells right across the country. Most recently with the CEO of OMERS Ventures, John Ruffolo. And Ruffolo knows a little about SR&ED—he was asked to tesify to the Senate Committee in November on the topic of Financing Growth for SMEs.

While Ruffolo is in support of most of the Jenkins Report recommendations, he remains greatly concerned about the potential reduction of SR&ED tax credit assistance. Ruffolo lists five reasons why he thinks such a recommendation is a “very bad idea.”