Government funding for small business owners!

gov. fundingScientific research and experimental development credits (SR&ED) represent a significant financing and cash flow source for Canadian small businesses. Under this tax incentive program, corporations can get a tax credit of nearly 40% on eligible R&D expenses. In addition, should the corporation not have income taxes to pay, then it can often receive a cash refund up to the amount of the tax credit.

For 50 of Canada’s fastest growing companies these credits represented 22% of their financing in 2012, according to the 2012 Profit Magazine Hot 50 report.But changes are coming to the program. One of the most significant is the elimination of R&D capital assets as eligible deductions under the program as of 2014. That means that 2013 is the last year that such eligible investments will generate a SR&ED tax credit.

Examples of the type of equipment that often qualified under the program are:

  •  Equipment used in a test facility or laboratory
  • Computer equipment used for testing software programs that would qualify for SR&ED
  • Equipment used in testing food processing e.g. ovens, freezers, etc.
  • Automobile used to test an alternative fuel source.
Before making such investments, speak with a tax advisor knowledgeable in SR&ED to find out if the expense is likely to qualify under the program. Business owners of specialized equipment companies should put their sales force on overdrive to capture this window of opportunity. After 2013, the after tax cost of these products will rise significantly for customers.
The blogs posted on our website provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

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