Innovation Canada: A Call to Action

Innovation Canada: A Call to Actiondirect support measures benefiting SMEs, asrecommended in other chapters of this report.It is also important to note that about 650newly-created start-ups apply for SR&ED creditsfor the first time each year. Lack of adequatefinancing is a constraint on the growth of moststart-ups, and the current SR&ED tax credithelps to address this problem through the35-percent refundable tax credit. Ourrecommendations will provide start-ups, as wellas established SMEs, with a wider range ofsupport to help them bring their innovations tomarket through an expanded IRAP program, anew commercialization vouchers pilot program,a new concierge service, greater access to ahighly skilled and entrepreneurial workforce,enhanced procurement programming, andimproved access to risk capital at the start-upand later stages of growth. While the enhanceddirect support measures that we arerecommending would provide alternativesources of finance for start-ups and a portionof the SR&ED credit would still be refundable,some start-ups might receive a lower level ofsupport through these measures. In view of this,the government may wish to investigate theadministrative feasibility and budgetaryconsequences of providing a fully refundablelabour-based tax credit for a fixed number ofyears for start-ups to ensure continued supportfor Canadian entrepreneurs who take on therisks of establishing new firms.6-14