For enterprises that require financial assistance to invest in research and development (R&D) projects, an ideal choice is non-dilutive funding. Unlike the dilutive alternative, non-dilutive funding sources do not compel businesses to give up equity to receive support. If your business operates in Nova Scotia or has holdings there, you may be eligible for several federal and provincial non-dilutive funding opportunities.
Consider the three following sources to begin financing your project.
1. SR&ED Tax Credits
The Scientific Research and Experimental Development (SR&ED) tax incentive program is among the Government of Canada’s most significant sources of funding for R&D. The initiative was started to prompt more Canadian businesses to pursue R&D in the nation.
The SR&ED credits differ based on the size and type of business — an organization can obtain a deduction against income or a refundable or non-refundable investment tax credit (ITC). These ITCs are generally between 15% and 35% of qualified SR&ED expenses, such as consumables, salaries, and subcontractor charges.
One of the program’s best features is that your R&D efforts do not need to be successful to be eligible for tax incentives. The primary goal is to stimulate more innovation in Canada. With the support of federal SR&ED tax credits, your business may be positioned better to financially plan for R&D activities.
Provincial R&D Tax Credits
In addition to the federal SR&ED program, enterprises in Nova Scotia may also be eligible to receive the provincial R&D tax credit. This fully refundable incentive amounts to 15% of qualifying expenditures and is the same for all corporations, no matter their size.
This provincial offering follows the same conditions as the federal program regarding eligible costs. The main stipulations for this R&D tax credit are that your business has permanent equity in Nova Scotia and intends to perform R&D in the province.
2. IRAP Funding
The Industrial Research Assistance Program (IRAP) is another federal initiative that serves small and medium-sized businesses (SMBs) in Canada. Administered by the National Research Council of Canada (NRC), IRAP has been a catalyst for business growth and innovation for decades.
IRAP seeks to advance the growth of SMBs in Canada, generating more wealth for the nation and enabling companies to bring innovative ideas to market. To support these objectives, IRAP offers the following:
- Financial support: This funding is designed for enterprises focused on technology-driven innovation.
- Advisory services: Recipients access business and technical guidance from over 250 industrial technology advisors (ITAs) with ample experience in science, engineering, and management.
- Networking: IRAP provides businesses with a network of partners from various sectors, such as government agencies, industry associations, colleges and universities, and financing organizations, to expose them to numerous opportunities to scale up.
3. Other Local Grants and Tax Incentives
Businesses may also consider other Nova Scotia small business grants and tax credits to support their pioneering R&D projects. The following are two local non-dilutive funds your company may pursue to obtain financial support:
ACOA Atlantic Innovation Fund
Part of the Atlantic Canada Opportunities Agency (ACOA), the Atlantic Innovation Fund (AIF) empowers organizations to create original products and services and bring them to market. It also helps these groups leverage new technology for daily operations or expand access to markets.
For a project to be eligible for AIF funding, it must be large-scale and feature some aspect of R&D that displays a strong potential for commercialization. Private sector businesses are eligible for support from AIF.
Nova Scotia Digital Media Tax Credit
The refundable Digital Media Tax Credit is intended to aid with the costs of creating interactive digital media products in the province. The amount businesses receive from this tax credit will either be 50% percent of the eligible Nova Scotia labour expenses or 25% of total expenditures made in the province — whichever is the lesser value.
Companies developing products outside the Halifax Regional Municipality may also attain a geographic bonus on this tax credit. This additional incentive applies to 10% of labour costs or 5% of total expenses. Furthermore, corporations may qualify for a credit on marketing and distribution costs of up to $100,000 per product.
Businesses in Nova Scotia Can Advance Funding with Easly
These funding sources can provide critical working capital to businesses in Nova Scotia; however, their delivery can take months. With Easly Advances, you can get access to your SR&ED tax credit refunds, Digital Media tax credit refunds, IRAP project grants, and other government grants in as little as two weeks.