CATA Proposes Resilience Rebound Emergency (RRE) Program
The Canadian Advanced Technology Alliance (CATA) calls on feds to protect Canadian taxpayer $36B annual innovation investment and endowment, the Resilience Rebound Emergency (RRE) Program, a proposed new program.
Canadian Tech Businesses
There are 13,000 small and medium-sized Canadian owned tech businesses that participate in the scientific research and development (SR&ED) investment tax credit (ITC) program. These companies employ 760K people across Canada and they are vulnerable. If these companies fail, there is a risk that their technologies will be absorbed off-shore and it will take years for the tech sector to recover. Unfortunately, many do not qualify for the current relief programs available from the CRA.
The Canadian government is providing emergency support in the form of the Canada Wage Subsidy (CEWS), Industrial Research Assistance Program (IRAP) for 1000 companies who didn’t qualify, and the $40,000 loan Canada Emergency Business Account (CEBA). These programs were much needed and are helping many in need but many of these programs are not accessible for small and medium-sized businesses.
Resilience Rebound Emergency Program
CATA has identified a missing piece in the emergency relief being provided to Canadian companies as a result of the COVID-19 emergency. CATA proposes the Resilience Rebound Emergency (RRE) Program. CATA proposes:
The Canadian Revenue Agency (CRA) experience and data with the established firms with good SR&ED records provides the basis for a pre-approved loan mechanism for companies. A baseline loan cap could be based on historic company investment in R&D. The financing could be administered by CRA, like the successful digital-first CERB and Child Tax Credit top up programs or via another mechanism.
More specifically, we suggest a zero interest loan, with a forgivable component based upon qualified, capped expenditures in R&D, plus IP, finance, marketing and sales. We suggest that the amount would be based on historic claim size; up to 5X annual SRED claim (averaged over the last 2 years of SR&ED)
Obviously, there could be other derivatives, but the core issue is how to protect Canada’s huge investment in these technologies and development teams for the recovery and the benefit of its citizens.
Canadian employer businesses are 97.9% small and medium size employing 89.6% of the private sector
What can you do?
If you agree with the proposed new programs by CATA, you can take action by can calling upon your MPs. If you would like to support this program you can fill out the google form here to submit to your MPs.
Conclusion
There are many programs out there to help businesses survive the COVID-19 pandemic. Unfortunately, there are businesses that do not qualify and need to find assistance in another way. We will continue to report on any assistance or information from the CRA or other Canadian government agencies.