[bcantrill]

In my experience, SR&ED is a system that exists to employ government bureaucrats and their symbiotic ecosystem of consultants and auditors -- everyone else is a loser. And I felt this way before we at Joyent were audited; after we were audited (which came back clean, but was incredibly time consuming and extraordinarily painful) my opinions on SR&ED are much more pointed: we still have a Canadian office and it hasn't affected our hiring there (Joyent is hiring in Vancouver![1]), but I want absolutely nothing to do with SR&ED ever again in my life. (That is, we have not applied for SR&ED credits since and will never do so again.)

If Canada wants to do something for startups, they should setup a sovereign wealth fund that does early stage investment in Canadian companies -- and then it should actively help make those companies successful. SR&ED is a transfer payment from Canadian taxpayers to Canadian consultants; it should be scrapped, not fixed.

[1] https://news.ycombinator.com/item?id=10312448

[sintaxi]

This is nonsense.

SR&ED is not a grant you apply for, it is a tax credit that you are ENTITLED to for taking technical risk and venturing into areas of technical uncertainty.

SR&ED is a tax credit and a perfectly reasonable one. The problem with SR&ED is that it is a badly abused which leads to painful auditing processes for everyone.

Since Joyent Canada is (as far as I'm aware) a 100% wholly owned subsidiary of a US corporation it doesn't surprise me the CRA took a close look at the claims as Canadians ultimately wont see the extent of the benefits that the program hopes to achieve for Canadian corporations. The fact that you call it the "Canadian office" rather than the "Canadian company we own" illustrates a frame of thinking that likely makes the CRA uncomfortable. The program is designed to help Canadian companies.

So.. you are an American, working for an American company, managing a team that is receiving Canadian tax breaks for generating I.P. for the American corporation and you are complaining that you received friction from the CRA? Yeah, no shit.

> SR&ED is a transfer payment from Canadian taxpayers to Canadian consultants; it should be scrapped, not fixed.

No, SR&ED is not funding from Canadian tax payers. Once again it is a tax credit for money spent on salaries for performing tasks that have abnormally high risk. Its critical to understand the difference before voicing an opinion on the matter.

edit: wording

[bcantrill]

You fundamentally misunderstand SR&ED: it has nothing to do with "helping Canadian companies" and everything to do with encouraging companies to do R&D work in Canada. That Joyent Canada is a fully owned subsidiary of a US corporation is immaterial (indeed, SR&ED is designed to attract R&D investment from multinationals not based in Canada!), and as a I learned as part of the audit, the audit that we received is considered "routine" for the first year that a company applies for SR&ED credits. Our consultants didn't think it was a big deal, and Revenue Canada was very polite about it; they (apparently) just wanted to make sure that we employed everyone that we said we employed and that they were engaged in eligible activity (which we did and they were -- it was all fine). But the audit was expensive for us in terms of time, and we made the decision that SR&ED wasn't worth it. That's not nonsense; that's a business decision.

[benjaminfox]

> If Canada wants to do something for startups, they should setup a sovereign wealth fund that does early stage investment in Canadian companies -- and then it should actively help make those companies successful.

The Business Development Bank of Canada (a financial institution owned by the federal government) actually does this - it has a venture fund that's one of the largest in Canada.

http://www.bdc.ca/EN/bdc-capital/venture-capital/strategic-a...

[amackera]

THIS

There's a few other startup grant opportunities out there but they're mostly province dependent and not very accessible.

What you're proposing is more of a startup incentive than an R&D incentive though. Not saying it's a bad thing, just different.