(Article published on March 2, 2016 on the website of YAD International
Your head office is located outside Canada, and you are in the technology development business. Have you ever thought of setting up an R&D team in Canada? In addition to abundant local expertise and cutting-edge infrastructures, the federal and provincial governments provide very attractive tax incentives.
Are you in Europe, in Asia, or anywhere in the world, and think Canada is the land of winter and of igloos? Maybe, but it is also much more than that! It is one of the most advanced nations on the planet in terms of innovation, as well as research and development. The country considers such investments to be strategic for its competitiveness in the face of globalization. Results: over the last quarter century, Canada has brought in tax incentives to encourage R&D investments, supported by annual budgets of several billion dollars.
The SR&ED program allows a foreign company established in Quebec to claim up to 35% of R&D employee salaries, versus up to 74% for a Quebec company. There’s also 18% of subcontractors’ fees that can be claimed (38% for a Quebec company). For the CDAE program, we can claim 30% of gross salaries, but the program covers a broader range of technical activities. It is therefore possible and financially profitable for a foreign company to create an R&D team in Canada.
For French companies in particular, Quebec provides a variety of additional benefits. “We share a common language, a common culture, a similar legal system, as well as exclusive immigration agreements which facilitate employee movement from one side of the Atlantic to the other”, adds Pierre Savignac. The president of the firm which specializes in SR&ED, relates the cases on some of his French clients: “Labour laws in Quebec are way more flexible than in France! Being able to correct a ‘hiring error’ by paying out just two weeks of salary creates a dynamic professional environment which fosters meritocracy and investment.”
Many Canadian and foreign companies are already enjoying these generous grants and subsidies. So, why not you? You must also be aware that firms such as Emergex SR&ED Consultants are experts in preparing SR&ED and CDAE claims and can thus guide and advise you in all your efforts.
Contact the experts at Emergex today for more information about these programs and their unique features!
Emergex, in partnership with Inno-centre, presents the webinar entitled: “How to Optimize Your SR&ED Tax Credits?”
Preview of the conference
Are you claiming all the R&D credits your company is entitled to?
What are best practices and strategies for SR-ED claims to maximize your reimbursement?
What are the most common mistakes? (type of compensation, outsourcing, profit vs. credit rates, optimization with other programs, etc.)
Do you proactively manage the audit risks by the CRA, and therefore potential cuts, in the current context of administrative and financial tightening of the program?
If you are not 100% convinced of your answers to these questions, do not miss this webinar with Pierre Savignac, CEO of Emergex SE&ED Consultants and partner of Inno-centre for over a decade, who will share with you his 20 years of experience in SRED!
Since 30 years, Inno-centreoffers consulting services to innovative SMEs at various stages of their development. Its team of over 80 advisors intervenes throughout Quebec from its offices in Montreal and Quebec City. It has been recognized as one of the most successful Canadian accelerators by a committee of venture capital specialists retained by Finance Canada, as part of the selection for the Canadian Accelerator and Incubator Program (CAIP).
Mike C. Evans, one of Emergex’s client managers based in our Toronto office, was asked for an interview by a journalist from Tech & Design. The article written provides an introduction to the government program of tax credits for SR&ED, as well as its challenges, especially for startups. Emergex is mentioned several times, especially for its ability to assist startups and other companies of all sizes in the claims process. Emergex also plays a role of education for startups, which by definition would be the first beneficiaries of SRED, but often do not know the program. Here’s an excerpt of this interview:
If you’re a startup developing experimental technology – and that’s most startups in Canada – the government wants to help you recoup a good chunk of the costs that come with cutting-edge R&D.
“The government is helping innovation in Canada by reimbursing some of the R&D investments that these companies have made,” says Evans. “SR&ED has been around for 25 years and yet, believe it or not, you’d be amazed how many people don’t know about it, and worse, how many think they’re not eligible.”
Emergex, which has been in this business for 20 years, helps tech startups determine their eligibility for SR&ED claims, and as well to put together and file those claims.
There are two parts to a claim. The first contains a 1400-word technical narrative describing why the R&D in question is eligible. The second part consists in a financial data collection that must be carefully right-sized (neither too much nor too little) to make sure the dollars being claimed match and support what’s actually been done. Success means recouping about 68% (for Ontario) of eligible salaries and in some case bonuses. A rejection or mishandled claim could lead to an audit, which Emergex is also well-equipped to defend.
“The biggest mistake startups make is when they try to file a claim themselves,” says Evans. “It’s a skilled, complex, sophisticated process. It’s not like filling out a T1 for your income tax return and 20 minutes later it’s done.”
Both parts are challenging. The technical narrative may seem straightforward, but “it’s where most of the claims are denied,” Evans says. “It’s knowing how to describe the technology in a way that meets some basic criteria: did the company have to overcome any technological uncertainties? Were there obstacles that had to be overcome that couldn’t be fixed by off-the-shelf solutions?”
The next step is to determine the number of eligible hours, a process which can often stall the claim. “What we find is that, especially with the smaller companies, they’re busy building and selling their product, and they’re not always the best administrators and accountants. So when we ask them to extract and compile the numbers – in other words, the efforts invested in hours and how much they pay people – that can be a challenge because they have no records, or poor records.”
A big hurdle Emergex is working to overcome is the 42% of companies that could file for SR&ED just don’t (according to Canada Revenue Agency’s own statistics), for lack of knowledge.
“Just about anybody that is a startup could be eligible,” says Evans. “They’re innovators who believe they have an idea that’s new, or else they wouldn’t be doing it. So by definition that means they could be eligible for SR&ED, and I wouldn’t discourage anybody from giving us a call and inquiring.”
You can reach Mike Evans by e-mail at mevans@emergex.com or by phone at 905-849-3033 #645.
This lunch and learn workshop will focus on the evolution of the government’s Scientific Research and Experimental Development (SR&ED) program with expert advice from Emergex SR&ED Subsidies targeted at preventing audits and defending SR&ED tax credits in the event of one.
Emergex SR&ED Subsidies is a consulting firm in R&D tax credit claims particularly specialized in the software and IT services industries.
Target Issues
SRED audits are more frequent, more challenging and more expensive than ever before
Contemporaneous documentation has become an unavoidable requirement
Compliance costs in proportion to the amounts claimed are growing fast
Following a refusal, companies have filed 25 times more notices of objection challenging CRA decisions, compared to 2007
Against this backdrop, how to prevent or (if it is too late) prepare and succeed in defending your SR & ED claim in the event of an examination by the Canada Revenue Agency (CRA) ?
Advice Offered
How to document and structureyour SR-ED projects indirectly from your client projects
… while meeting the 5 eligibility questions in Revenue Canada’s assessment process
How to present and simulate your projects before an inspection so that it complies with the decision-making process of the CRA auditors
How to survive the increased scrutiny of time sheets, job profiles, subcontractors, etc., by Revenue Quebec
Presentation of real-life cases in IT proving that it is possible to prevent, or else survive, an audit of your SR&ED
CEO of Emergex SR&ED Subsidies that he founded in 1994
Emergex has been recognized as one of Canada’s fastest-growing companies in the 24th edition of the Profit 200 ranking
B.Sc. in Computer Science from Université de Montréal
30 years of professional experience with: Videotron (high-speed Internet launch), Virtual Prototypes (acquired by CAE), MediaSoft Telecom (now integrated in Bell), Alis Technologies (bought by OpenText) and his own enterprises
Certified Project Management Professional (PMP) by the world-renowned authority PMI
Member of the Fiscal and Financial Planning Association (APFF)
This lunch and learn workshop will focus on the evolution of the government’s Scientific Research and Experimental Development (SR&ED) program with expert advice from Emergex SR&ED Subsidies targeted at preventing audits and defending SR&ED tax credits in the event of one.
Emergex SR&ED Subsidies is a consulting firm in R&D tax credit claims particularly specialized in the software and IT services industries.
Target Issues
SRED audits are more frequent, more challenging and more expensive than ever before
Contemporaneous documentation has become an unavoidable requirement
Compliance costs in proportion to the amounts claimed are growing fast
Following a refusal, companies have filed 25 times more notices of objection challenging CRA decisions, compared to 2007
Against this backdrop, how to prevent or (if it is too late) prepare and succeed in defending your SR & ED claim in the event of an examination by the Canada Revenue Agency (CRA) ?
Advice Offered
How to document and structureyour SR-ED projects indirectly from your client projects
… while meeting the 5 eligibility questions in Revenue Canada’s assessment process
How to present and simulate your projects before an inspection so that it complies with the decision-making process of the CRA auditors
How to survive the increased scrutiny of time sheets, job profiles, subcontractors, etc., by Revenue Quebec
Presentation of real-life cases in IT proving that it is possible to prevent, or else survive, an audit of your SR&ED
CEO of Emergex SR&ED Subsidies that he founded in 1994
Emergex has been recognized as one of Canada’s fastest-growing companies in the 24th edition of the Profit 200 ranking
B.Sc. in Computer Science from Université de Montréal
30 years of professional experience with: Videotron (high-speed Internet launch), Virtual Prototypes (acquired by CAE), MediaSoft Telecom (now integrated in Bell), Alis Technologies (bought by OpenText) and his own enterprises
Certified Project Management Professional (PMP) by the world-renowned authority PMI
Member of the Fiscal and Financial Planning Association (APFF)
Professional development workshop on the SR&ED program with expert advice on defending your R&D your tax credits in the event of an audit.
Come and find out how to prevent or (if it is too late) to prepare and survive a CRA audit of your SR&ED.
The speakers, Jean-François Djoufak, Ph. D. in Computer Science and SR&ED expert, along with Pierre Savignac, PMP and CEO of Emergex, will answer your questions:
How do you document and structure your SR&ED projects indirectly from your client projects
… while answering the 5 eligibility questions in Revenue Canada’s assessment process?
How do you present and simulate your projects for an audit in a way that satisfies the decision-making process of the inspectors?
How to survive increased scrutiny of time sheets, job profiles, subcontractors, etc., by Revenue Quebec?
What is the impact of recent rate cuts and the new $50,000 expense minimum in Quebec?
Can you survive an audit of your SR&ED? Yes, you can! Using real-life cases, we will show you that it is possible indeed!
Emergex SR&ED Subsidies is the R&D tax credit consulting firm most specialized in information technology.
Schedule
9:30
Welcome and breakfast (pastries, fruits and coffee)
10:00
Workshop-conference
11:30
Question period
12:00
End of activity
Registration
Only for Emergex clients that have filed at least two SR&ED claims.
Cost: $10, taxes included. Free when registering to our newsletter.
For information or registration (before October 27th): info@emergex.com or 514-765-3333 #0
This year I am looking to finance my tax credits in advance, and not only did Emergex introduce me to the right people, but every lender is very comforted by the fact that I’m working with Emergex. They have a reputation of working with solid companies and that reputation is a big benefit to all of their clients.
Are you in Europe, in Asia, or anywhere in the world, and think Canada is the land of winter and of igloos? Maybe, but it is also much more than that! It is one of the most advanced nations on the planet in terms of innovation, as well as research and development. The country considers such investments to be strategic for its competitiveness in the face of globalization. Results: over the last quarter century, Canada has brought in tax incentives to encourage R&D investments, supported by annual budgets of several billion dollars.
