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Private Sector Members of the Previous SR&ED Partnership Committee

Submission — Private Sector Members of the Previous SR&ED Partnership Committee

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Submitter(s): Mann, John L.

Summary: R&D is widely recognized as a critical component of Canada's future productivity, economic prosperity, and global competitiveness. We believe that the SR&ED Tax Credit Program is Canada's most important incentive for small, medium and large business all across Canada. We also believe that it has been, and continues to be, a highly successful program that delivers on its objectives both financially and in numerous other ways that are often difficult to measure and not always reflected in the measures defined by government. We are also of the view that government assessments of the program significantly underestimate the financial returns of the SR&ED tax credit program. However, the program is not nearly as successful as it could be. Industry concerns about red tape, complexity, consistency, frequent policy changes, failure to communicate policy changes internally and externally, and lack of certainty are well known and have been raised by many groups over many years. 15 years ago, the program was in serious trouble with wide-spread complaints. An action plan was developed at a National Stakeholder Conference to address the issues of the time, and a private sector committee was put in place to oversee a transition to a client friendly program. This activity was highly successful and complaints disappeared in a few years. However, progress stalled in 2005 as staff turnover in senior levels at CRA brought in new officials who began to orchestrate a return to the audit based mentality of the past. The Partnership Committee with the private sector, and their influence on the delivery of the program, was discontinued in 2006. None the less, the private sector members from across Canada have continued to meet on our own time and at our own expense and we continue to monitor the program and exchange views on issues and ways to make a difference. Today, the program is in trouble again with widespread complaints about inconsistency, frequent policy changes, failure to communicate, and a poisonous widespread return to an audit based mentality. We are hearing about these problems with ever increasing frequency and we are concerned that the administration of the SR&ED Program is returning to a period of inconsistency and lack of transparency similar to that of the 1990s. The administration of the SR&ED program is working increasingly against the incentive philosophy, which is at the core of the program, and is building disincentives to its use for those to whom the program is targeted. History is repeating itself. At risk is nothing less than Canada's position in a competitive world economy. We recommend that the program be moved to a stand-alone organization that understands and values the incentive nature of the program and who make it an integral part of their primary mission to work with the program's clients to help them achieve the desired outcomes. This can and has been done in other countries. It is our sincere hope that this "root cause error removal" approach to repairing the program will enable it to flourish for the long term and truly deliver on its full potential. We also hope that our blunt approach to dealing with the issues that we have raised will be accepted in the spirit in which they were provided, namely the best interests of Canada and Canadians.

Full submission: PDF V ersion