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Innovative startups: Apply for the new Innovation Assistance Program by April 29th!

April 27, 2020

Innovative startups: Apply for the new Innovation Assistance Program by April 29th!

Synopsis
5 Minute Read

APPLY NOW: The federal Innovation Assistance Program (IAP) will help startups pursuing technology-driven innovation weather the economic fallout of COVID-19.

As we come to grips with the new normal of COVID-19 and its effect on our communities, governments at all levels have been rolling out programs to help individuals and businesses deal with the economic impacts. Hundreds of new programs have been rolled out at a pace never seen before and governments are planning on spending hundreds of billions of dollars to support them.

Some of these programs are highly effective, such as the Canadian Emergency Response Benefit (CERB), which addresses the immediate funding needs of individuals. The Canadian Emergency Wage Subsidy (CEWS) has also had a significant impact on businesses faced with decreased sales and forced closures. It provides a 75 percent wage subsidy of up to $847 per week, per employee, over 12 weeks to employers that keep employees on the payroll; even if they don’t actually work

The CEWS subsidy covers the period from March 11 through June 6, 2020. It only applies to help fund the payroll of employers who have seen a significant decrease in revenues between March through May, compared to the same period in 2019 or compared to January and February 2020. More details are available in our tax alert on this very topic.

What about startups?

These programs are great for established businesses, but startups that have not yet started generating revenue may wonder what subsidies and supports are available to them.

Many could still qualify for the tepid 10 percent Temporary Wage Subsidy (TWS) — see our tax alert for more information — but they would have to fund the remaining 90 percent of the payroll themselves. Otherwise, they were basically out of luck.

That is, until the federal government announced a $250 million special fund on April 17 to help businesses that do not otherwise qualify under the CEWS.

A program designed specifically for technology-driven companies

Through the Industrial Research Assistance Program (IRAP), the Government of Canada introduced the Innovation Assistance Program (IAP) specifically to support small and medium enterprises (SMEs) that are pursuing technology-driven innovation but are not eligible for the CEWS — either because they do not have sufficient revenue history or have not earned revenues at all. This wage subsidy would offer support for up to 12 weeks, covering the April 1 to June 23, 2020 period.

Other conditions include:

  • Being incorporated as of March 1, 2020
  • Being profit-oriented, and
  • Having 500 or fewer full-time equivalent employees. 

The subsidy also offers the possibility of further growth by developing and commercializing innovative products, services or processes.

Apply by April 29th

Applications for the IAP subsidy must be made online and will be accepted until April 29, 2020 at 11:59 EDT. IRAP is committed to notifying applicants in writing if their application is accepted on merit as early as May 11, 2020. Payments to successful applicants are due to start the same week.

Although we do not know the algorithm that will determine successful applicants, we presume companies who already have research projects with IRAP will have an inside track. Details have not yet been disclosed on wage subsidy amounts will be, but we suspect it will be similar to the generous CEWS. 

Don’t delay — if you qualify, apply now.

To learn more about the IAP or for more information about your qualifying criteria, contact Anne-Marie Dupras, CPA, CA, Tax Partner and Business Advisor at 514.904.7360 or [email protected].

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