08 12 2016

It’s Good to Be an ICT Company in Canada Today

If you are one of the over 33,000 companies in the Canadian Information and Communications Technologies (ICT) sector, growth is likely on the horizon for your organization, and a government funding strategy should be part of that growth. Here’s why.

If you are one of the over 33,000 companies in the Canadian Information and Communications Technologies (ICT) sector, growth is likely on the horizon for your organization, and a government funding strategy should be part of that growth. Here’s why.

Showing ICT the Money

Between 2007 and 2014, sector revenues for ICT grew from $133.4 billion to $169.8 billion, a 27.2% increase. The software and computer services sub-sector alone increased by 48.8%. ICT industries are the largest performers of private sector R&D in Canada, leading to the Canadian government identifying them as one of four priority areas. In 2014, the ICT sector held a 31.1% share of all private sector R&D expenditures in Canada, and in 2015 spent over $9.1B in private sector R&D.

This has resulted in increased government funding at both the federal and provincial levels for ICT research and innovation through numerous tax credits, grants and loans, in addition to the Scientific Research and Experimental Development (SR&ED) tax credit. It has also meant reductions in corporate income taxes for ICT companies, and an increase in the export-related support of the Department of Foreign Affairs and International Trade and Export Development Canada. This year, Canada also introduced its first patent-related tax rate deduction (introduced in Quebec) for qualifying innovative manufacturing corporations whose paid-up capital for the previous taxation year (including that of subsidiary companies) is $15 million or more,

ICT companies are growing rapidly because they see the value in investing in their own development, which is often a prerequisite for the government granting them additional funding. This willingness from Canadian ICT companies to invest in their own growth, combined with the government’s generous funding initiatives, has resulted in Canada becoming a hub for major incubators, a world leader in the video game industry, and an attractive place for large companies like Microsoft and Google to establish their R&D facilities.

Canada One of the Most Generous Government Financing Environments for ICT Companies

With federal expenditures in science and technology at a high level of $10.8 billion a year, the Government of Canada has taken significant steps to put in place the foundations for research, development and innovation in this sector.

In fact, Canada has one of the most generous government financing environments for ICT companies in the world. Of the overall government funding programs in Canada, over 300 of them are geared solely towards ICT companies. In addition, the 2016 federal budget signaled further significant investments in ICT, as well as a plan to lay the groundwork for an innovation agenda in the next two budgets.

From early stage R&D to pre- commercialization to export, these programs can make a significant impact on an ICT company’s ability to continue investing in growth and development, with some initiatives even funding up to 100% of costs for certain projects. The onus is therefore on ICT companies to uncover how their planned projects can be matched with available funding, potentially resulting in improved cash flow and a better bottom line, which is in stark contrast to having to sign over collateral or shares when turning to private investors for growth capital.

Tax Credits, Grants and Loans, Oh My!

Your Challenges When Looking to Access Funding Planning for government funding involves cross-referencing expenditures for past and future projects with the categories below to achieve a better understanding of where your chances of obtaining funding lie. While objectives vary from program to program, sometimes combining the needs of multiple internal projects might help you achieve certain milestones that could impact your chances of getting approved.

 

  • Commercialization
  • Capital expenditures
  • Hiring
  • Training
  • Energy efficiency
  • Innovation
  • R&D
  •  

 

While tax credits allow companies to claim past activities, it is always best to plan for all types of government funding including tax credits, loans and grants by tracking relevant activities and including potential funding as part of an overall project strategy.

Mapping out an innovation strategy that is aligned with an organization’s overall goals will help zero in on the type of funding required to achieve objectives, helping to streamline the process. Once a deeper understanding of the innovation funding landscape is acquired, tracking changes to existing programs as well as the launch of new ones will put companies on the path to continued innovation and a more competitive future.

While mapping a government funding strategy, these are some of the challenges that are generally encountered:

 

  • What government funding programs is my company eligible for?
  • How much funding can my company receive?
  • How do I find out about program changes?
  • How do I track thousands of programs?
  • How do I assess the impact of a potential funding program on my other claims?
  • Where do I obtain the expertise to properly complete program applications?

 

  • Why Ayming, Why Now?

Ayming has helped our clients obtain over $13.4 billion in government funding in the last 5 years. This was achieved through a combination of proven tax credit experience, a proprietary database of grants, agile methodology that allows us to adapt our delivery in real time, and dedicated experts spanning many industries and regions.

As one of the few firms in Canada able to provide an integrated approach to government funding services (tax credits, grants, loans and procurement programs) for ICT companies through a single point of contact, we accelerate the process, anticipate your needs, and help secure funding in the areas of R&D, business development, hiring, training, and capital expenditures, whether you are:

 

  • A start-up requiring guidance, direction and support;
  • A rapidly growing company looking for the funding required to catapult its development;
  • A large, established ICT company looking to validate current government funding strategies and explore export and international options;

 

Ayming’s government funding specialists will analyze your projects, identify available funding, create a plan of action, and help you obtain and track the funding you need to accelerate and secure your growth strategy.

Sources: The Government of Canada: Innovation, Science and Economic Development Canada, ISED, Information Technology Association of Canada, Brookfield Institute