When Harley Finkelstein—one of Canada's leading innovators and co-founder of Shopify—advocates for stronger government-backed innovation funding, we listen. His recent article on SR&ED reform raises critical questions about making Canada's primary R&D support program more accessible and effective.

We are genuinely excited about this conversation. Any time one of Canada's most successful entrepreneurs is pushing for better innovation policy, that's a win for the entire ecosystem.

Harley's reform plan roughly boils down to 3 key themes:

  • Establish a Pre-Approval System: Create an online portal where engineers and scientists can submit project templates upfront and receive binding approval certificates, reducing annual filing to simple expense reporting
  • Eliminating Consultant Spending: Cut out the consultant industry (which serves 80%+ of claimants) by enabling R&D teams to handle directly
  • Expanding Program Scope: Include foreign companies (with Canadian IP ownership requirements) and broaden qualifying activities to cover commercialization work like prototype refinement, regulatory approval, and pilot projects

The Best analogy: Think of SR&ED like building a house. In some jurisdictions, you may be allowed to do your own plumbing or electrical work without involving professional contractors. But if you don't know those systems, you may end up with a faulty house. Most smart homeowners hire licensed contractors who've proven their expertise.

The same principle should guide SR&ED reform. We can make the program more accessible without throwing out the quality standards that protect taxpayer dollars and ensure legitimate innovators get the support they deserve.

The case for using Professionals

More than 80% of SR&ED claimants work with specialized consultants, and there's a good reason why. You could try to navigate the complex qualification requirements yourself, but here's what you'd be taking on:

  • Technical qualification decisions: Distinguishing genuine technological uncertainty from routine development work
  • Multi-program coordination: Optimizing across SR&ED, CDAE, IDMTC, and Cleantech incentives
  • Documentation strategy: Creating audit-ready records that capture the experimental nature of innovation
  • Risk management: Ensuring claims withstand increasingly rigorous CRA audits

We believe that entrepreneurs should focus on building businesses, not becoming tax experts. Any single moment not spent on finding and retaining customers is a wasted moment. The most successful companies recognize that specialization drives results, and there is always an opportunity cost for time. They hire marketing experts for marketing, legal experts for legal work, and R&D tax credit experts for maximizing innovation incentives.

The Problem with Over-Simplifying SR&ED

We agree that SR&ED should be more accessible. But there's a critical balance to ensure that the right due diligence is built into the program to reward innovators.

Where experience is missing, DIY approaches to R&D tax credits may fall short because:

1. Quality Control Breaks Down

Without expert guidance, companies may misclassify activities, either missing legitimate qualifying work or overclaiming ineligible expenses. An audit with the CRA is neither pleasant nor necessary if you can avoid it with quality work.

2. Multi-Program Value Gets Lost

Companies attempting DIY SR&ED may miss complementary programs that could boost their total returns. You should focus on optimizing across programs.

3. Audit Protection Disappears

When the CRA comes calling, DIY claimants are left exposed with inadequate documentation and no professional support.

The licensed contractor analogy holds: Just as building codes protect homeowners and communities, SR&ED quality standards protect both taxpayers and legitimate innovators.

A Framework for Smart Reform

Canada's recent SR&ED enhancements (higher limits, public company eligibility, and capital expenditure inclusion) represent genuine progress worth building upon.

Future reforms should focus on:

Strengthen Professional Standards

Ensure companies work with qualified specialists who understand the full landscape of Canadian innovation incentives. Think licensing requirements that maintain quality while expanding access.

Streamline Without Compromising

Implement risk-based auditing, faster processing for repeat claimants, and digital submission processes, but maintain the documentation standards that prevent fraud.

Expand Access Thoughtfully

Consider carefully vetted expansions to qualifying activities based on evidence and stakeholder consultation, always with appropriate safeguards.

Maintain Due Process

Preserve the review standards that ensure SR&ED funds genuine innovation activities, not routine business operations masquerading as R&D.

The Bottom Line

We absolutely agree that the SR&ED program should be improved and made more accessible. After all, effective reform requires smart guardrails that prevent abuse while empowering legitimate innovators.

Entrepreneurs should focus on what they do best: Building innovative businesses. Let qualified professionals support them as needed. Canada's innovation future depends on getting this balance right: Accessible programs with smart safeguards that protect both innovators and taxpayers.

Ready to maximize your R&D investments without the compliance headaches? The enhanced SR&ED program offers more opportunities than ever, but navigating the requirements still requires expertise. Connect with our team to explore how we can help you capture maximum value while ensuring full compliance.