INNOVATION July-August 2017

Figure 4

your R&D activities. Even if you might fall within a regime that favors one of these support options, you may benefit from considering the other option. Use the principles outlined in this article to temper your expectations and focus your efforts effectively. Periodically compare your funding mix against Figures 3 and 4 and recognize that departures from the profiles as presented here mean you are likely leaving available cash on the table. With some diligence, you will find government a much less coy strategic partner than you thought. v Darius Garcha P.Eng., CPA, is a Senior Manager, Strategic Projects at Ayming, an international firm specializing in Business Performance. He has more than 13 years of industry and consulting experience. Laslo Cesar is the Director of the Finance and Innovation business line at Ayming, with more than 10 years of experience in Innovation Financing.

RepayableGrant

Grant

Tax Credit

Risk

Sales

Eligible Investment

Concept

Startup

Growing

Mature

Grant prospects in this phase are generally limited and you’ll be better served focusing your efforts on tax credits. As the viability of the technology comes into sharper focus, however, the expenses start getting capitalized and end up on your balance sheet as an asset from which you can derive future economic benefit. In this phase, grant potential improves significantly and you should shift your efforts

accordingly. Capitalization is determined by demonstrating the five criteria in Figure 5. The more criteria you meet, the more attention you should be providing to grant financing. Conclusion It’s important to realize that government grants and tax credits work together to maximize the support available to finance

Figure 5 1. What is the technical feasibility of completing the R&D asset so it will be available for use/sale? 2. What is your intention to complete the R&D asset and use/sell it? 3. What is your ability to use/sell the R&D asset?

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4. What is the availability of adequate technical, financial and other resources to complete development and use/sell the R&D asset? 5. Do you have the ability to reliably measure the expenditure related to the R&D asset during development? 6. How will the R&D asset generate probable future economic benefits? a. Can a market can be demonstrated for the R&D project or the output of the R&D project if sales are external?

For 50 years Tetra Tech’s engineers and scientists have provided sustainable solutions for water, environment, infrastructure, resource management, and energy projects. With 3,500 employees in Canada and 16,000 total employees worldwide, we have grown to become one of North America’s largest engineering firms.

b. What is the usefulness of the R&D project internally if the project or its output is not to be sold?

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