Mr. Speaker, the scientific research and experimental development program, or SR and ED, is a federal tax incentive. It is not a funding opportunity through a grant or contribution.
The tax incentive has two components. The first is an income tax deduction, which allows immediate expensing of eligible expenditures. Eligible expenditures in 2014 include most of the costs that are directly related to SR and ED, including salary and wages, materials, and overhead.
The second is an investment tax credit in respect of eligible expenses. The general rate is 15% in 2014. An enhanced rate of 35 % is provided to small and medium-size Canadian-controlled private corporations, or CCPCs, on their first $3 million of eligible expenditures. Unused credits earned in a year are generally fully refundable for small and medium-size CCPCs on their first $3 million of current expenditures. Unused credits can be carried back three years and forward twenty years.
Information on the tax expenditures related to the SR and ED program can be found in “Tax Expenditures and Evaluations 2013”, available at http://www.fin.gc.ca/taxexp-depfisc/2013/taxexp13-eng.asp.