New Approach— Investment Framework (IF)
Previous Approach
In general, the IRB Policy credits investments and technology cooperation activities undertaken by IRB Obligors in Canada by measuring the resulting future sales achievements of the Canadian company.
There are specific IRB Policy provisions for investments made with a post-secondary/public research institute or to a venture capital fund. These receive IRB credits based on a 5 times multiplier on the investment value.
Why change?
The overarching goal of all seven of the 2009 IRB policy enhancements is to encourage strategic and high-quality business activities in Canada. More specifically, the government wants to use the IRB Policy to leverage an increase in the number and value of long-term research and development (R&D) and commercialization activities happening at Canadian small and medium sized businesses (SMB).
New Approach
Industry Canada is introducing the Investment Framework (IF), a new IRB crediting tool to encourage IRB Obligors to make long-term investments in Canadian SMB, in innovation-related areas involving R&D and commercialization activities. Our goal is to increase the number and value of business expenditures in R&D at SMB recipient companies.
Eligible IF investments:
- must involve R&D and commercialization activities
- must be made directly at a Canadian SMB
- may take the form of cash or in-kind contributions
- will receive multiplied IRB credits based on the value and type of the investment:
| Type of Investment | Multiplier |
|---|---|
| Cash for R&D activities, or License for IP | 9 |
| Cash to purchase, or in-kind transfer of, Equipment | 7 |
| In-kind Transfer of Knowledge and/or Marketing/Sales Support | 4 |
- will receive IRB credits over a predictable timeframe: half the credits will be awarded once the investment is made, with the remaining half awarded over the life of the IF project.
- will receive IRB credits with more certainty: IRB credits would only be revoked in cases of misrepresentation, investment removal or failure to meet reporting requirements. Because innovative activities at SMB involve a heightened level of risk, failure of the IF project or the SMB itself would not, in itself, cause IRB credit revocation.
The IF has been developed with the assistance of independent expertise and validation. Industry Canada consulted widely with stakeholders, both internal and external to government, to take advantage of recognized expertise and industry best practices.
An Applicant Guide has been developed to explain the IF in more detail and to provide step-by-step guidance about the application process. Frequently asked questions are also available.
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