[lucisferre]

SR&ED is a terrible program that is actively hostile to software startups.

To begin with under the definition of what the program considers claimable, in the strictest sense, most software work doesn't actually qualify, but the program is so poorly administered that most of them are able to successfully claim it anyways so they try, however you are always under the risk that your claim will be denied or clawed back.

Adding to this problem for startups, first time claimants have a much higher chance of being audited, as well as any time a claim increases significantly over the previous year (think high growth company). If an audit goes poorly enough you can also have previous years claims clawed back.

Then there is the time wasted in preparing and submitting, the pedantic time tracking that startups implement which is a drag on development teams in order to file these claims.

Finally, because the process is confusing and daunting enough most companies will hire a SR&ED consultant to file the claim for them where they will likely pay around 20% of the total claim.

In short, SR&ED is a great program for consultants to siphon money from tax payers but a terrible program for funding innovative startups.

[slantyyz]

My opinion of SRED is mostly negative based on some experience (albeit out of date, from the late 90s and early 00s) and talking to people I know who were trying to get SRED money.

In one instance, a company I worked for hired a consultant to do the application. This consultant basically interviewed everyone on the technical team and tried to coax us into saying every piece of functionality was novel and innovative, whether it was true or not. I came out of that meeting feeling so dirty that I wanted to shower for a couple of hours.

My other experiences were working in companies (or knowing of other people in other companies) who were applying for and getting SRED money where the R&D innovations were at best questionable.

As someone who works in tech, I want programs like SRED to work. On the other hand, being a taxpayer and seeing how some companies are getting SRED money for arguably undeserving R&D work makes me think SRED is a complete waste of taxpayer money.

[developer1]

Every technology company I have worked for claims and receives the SRED. None of them have deserved it - not even remotely close. Each of my companies have made millions in profit each year. We have never done anything innovative that required actual research or risking anything by developing new technologies. My teams have used linux, mysql, memcached, redis, and a couple of programming languages. 100% of the work is just writing normal code for web applications. How much of that $4 billion dollars being handed out is for fraudulent claims of R&D? I would bet more than $3 billion. There are supposed requirements to meet to be eligible for the benefit, but everyday programming work is being rephrased to sound innovative and difficult.

This benefit needs to be abolished, as the number of tax dollars being sunk into it is ridiculous. For the few percent of businesses that might actual merit such a benefit, oh well. Compete in the market like everyone else without assistance. The difference between a deserving business and a business that will lie and twist words to save 15-35% on salaries is impossible to determine accurately. Too many liars and fraudsters have destroyed the system, so kill the program and nobody benefits.

[wwhchung]

Would love to have access to anonymized SR&ED claims data. I'll also bet that while 75% of the claimant's are small businesses, they only get < 10% of the $4B (remind you of anything)?

It's why I advocate for a lower hard cap as well. With a hard cap, it's likely that the total amount paid out is well under $4B, which means we can then go on and address how we can better distribute funding and change the evaluation process to not be as restrictive.

[jb55]

I had a decent experience with it. We got $24k for using Haskell for a project. All I had to do was a couple writeups here and there explaining why Haskell was a technical uncertainty for the given task. SR&ED funds Haskell dev!

[ZeroFries]

The company I worked for which did SR&ED would encourage us to log as many hours as possible (up to 80/week) on fake tickets on a regular basis. They used as many dirty tactics for government money as possible.

[lazyant]

On one hand you are saying that there's bad claims and on the other hand you complain about having to document and having audits.

All you are saying is true except the conclusion in the last sentence, which may be a valid point but doesn't follow from the other facts.

[barkingcat]

That's how poorly administered the system is. I've seen companies go through SR&ED and it's fairly random whether the paperwork is going to be accepted.

Some companies document everything and end up being rejected for a random formerly unknown minutia, whereas other companies document less, and ultimately get approved for a bad claim.

Anyone I've talked to who's even been close to the process (a claimant, a technical contact, an interviewee, an administrator) have had traumatic experiences with the process.

[nickff]

You can have bad claims approved by very thorough and costly audits if the standard is poorly set (as is the case with SRED).

[wwhchung]

I agree that there are many other issues with SR&ED (including the one you mentioned above). I actually point out a few at the bottom of my post. :) I just chose to tackle one that I could put clear numbers and examples to and viable solutions.

[cmrdporcupine]

This describes my experience exactly. When I worked at an ad-tech startup a few years ago we wasted so many hours dealing with SRED consultants, writing things up, writing specifications... flowery language. IMHO big company stuff when we needed to be writing code and iterating fast to produce product, instead.

And in many cases there are web development or design agencies claiming and getting SRED, achieved purely by hiring consultants who know how to spin things.