Government funding for small business owners!
Scientific 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.