As the list below is by no means comprehensive, please feel free to inquire about a service if you do not see it listed.
Providing financial information to our clients in a timely and accurate manner is a commitment that we feel cannot be compromised. Meaningful, well-organized financial records ensure that your business operations will run more efficiently on a daily basis. Our firm provides a full range of cost effective accounting services including the following:
*General ledger & financial statement preparation
*Accounting system setup for new businesses
*Compilation of financial statements
*Audits and reviews
We prefer to take a proactive vs. reactive approach to tax services. By keeping current on new tax laws and legislation, we are in a position to identify key tax planning opportunities that minimize both your current and future tax liabilities. We provide our individual and business clients with the taxation expertise and knowledge that they deserve throughout the year. Tax services offered include, but are not limited to:
*Tax planning for individuals and corporations
*Return preparation for
- Estates and trusts
- Not-for-profit organizations
*Provincial and federal commodity tax planning and compliance
*Tax considerations in matrimonial settlements
*Tax effects of buying/selling a business
*Tax effective retirement and estate planning
As a business grows, it must hire more employees, which can result in increased payroll administration. We can assist you in implementing the controls necessary to ensure a reliable, efficient, and effective payroll system. Our firm can also help you develop a payroll system and prepare all necessary payroll tax returns in a timely manner.
We gauge our worth by the personal and business successes of our clients. We can help your business identify areas negatively affecting profitability and growth and develop solutions that are practical and technically sound. In addition to acting as a sounding board for management, we provide comprehensive, flexible strategies that address the issues affecting your business. The following are just a few of the areas in which we provide consulting services:
*Accounting software selection and implementation
*Buying/selling a business
*Business process improvement
*Financial & retirement planning
The SR&ED ITC program is the federal government's primary mechanism for encouraging industrial research and development in Canada. Canada Revenue Agency (CRA) administers the program. We have filed numerous SR&ED ITC claims for our clients, achieving a 98% success rate! That is because we know a successful SR&ED claim must be properly prepared to get your claim approved by the CRA. It requires an in-depth understanding of the program to successfully navigate the different Agency audits, to obtain the maximum possible refund cheque.
Companies who perform Industrial Research and Development may be entitled to tax relief. The Federal Government’s Scientific Research and Experimental Development (SR&ED) program provides tax incentives to Canadian businesses that develop new or improved technically advanced products or processes in Canada. CRA administers the SR&ED program. SR&ED is defined in tax legislation as follows: “Scientific research and experimental development means a systematic investigation or search carried out in a field of science or technology by means of experiment or analysis. That is to say:
(a) Basic research, namely, work undertaken for the advancement of scientific knowledge without a specific practical application in view,
(b) Applied research, namely, work undertaken for the advancement of scientific knowledge with a specific practical application in view,
(c) Experimental development, namely, work undertaken for the purposes of achieving technological advancement for the purposes of creating new, or improving existing, materials, devices, products or processes, including incremental improvements thereto,
(d) Work with respect to engineering, design, operations research, mathematical analysis, computer programming, data collection, testing and psychological research where such work is commensurate with the needs, and directly in support of the work described in paragraphs (a), (b) or (c).”
In simple Layman terms, it is nothing more than Industrial Research and Development! Some examples where you may be eligible for up to a 68% tax refund on your eligible R&D expenditures:
- Developing new products or processes;
- Improving your existing products, process, or equipment in non-trivial ways;
- Developing new tools and/or technical procedures;
- Exploring (technically) doing things better/cheaper;
- Trying to meet technical regulatory requirements;
- Exploring new uses for existing technologies;
- Investigating new materials; and
- The development of new technologies.
This refund is normally available regardless if you have paid any corporate tax and therefore, represents new money to your company.
HOW DO I KNOW WHETHER THE WORK I PERFORM QUALIFY FOR A SR&ED REFUND?
If you can answer yes to the following questions, you may fit within the SR&ED eligibility criteria:
1. Does your R&D generate new technological knowledge for your company? (Did you learn something new or create something technically innovative in the process?)
2. Does your R&D encounter technological or scientific questions, problems or uncertainties that require the development of non-routine solutions? (How do we do this? Can we do this? Did you overcome any technical barriers or uncertainty?)
3. Does your R&D follow a proper systematic investigation, with some form of evidence showing the experimentation that occurred? (Reports, notes, pictures, prototypes, discarded equipment, etc.)?
All expenditures made in Canada, which are in direct support, and essential to, the SR&ED work are eligible for the SR&ED tax incentives. Additionally, expenditures on equipment used primarily (more than 50 per cent) for SR&ED in Canada may earn a partial tax credits.
Examples of current expenditures that are eligible for the SR&ED tax incentives include:
- Salaries or wages of employees directly engaged in SR&ED activities;
- The cost of materials consumed in SR&ED work;
- Lease costs relating to machinery and equipment used all or substantially all (90 per cent or more) for SR&ED;
- Eligible expenditures paid to contractors to perform SR&ED work on behalf of the taxpayer;
- Eligible expenditures paid to specific third parties where the taxpayer is entitled to exploit the results of the SR&ED, and
- Expenditures for machinery and equipment that are used 50% - 90% for the performance of SR&ED in Canada.
FEDERAL SR&ED INVESTMENT TAX CREDITS (ITC’s)
There are currently two rates of investment tax credit for SR&ED in Canada:
1. A rate of 20 per cent for publicly traded companies, individuals, and\or foreign owned companies; and 2. An enhanced rate of 35 per cent for Canadian-controlled private corporations (CCPCs) with prior-year taxable income under $400,000 and prior-year taxable capital employed in Canada under $15 million.
Investment tax credits (ITC) may be deducted from federal taxes otherwise payable. Unused tax credits can be carried back three years (to the extent that they were not deductible in the year they were earned) or carried forward 10 years. In addition, unincorporated businesses and smaller CCPCs can obtain a refund of unused credits earned in a year.
BRITISH COLUMBIA SR&ED TAX CREDITS (effective September 1, 1999)
All Provinces except Alberta and New Brunswick offer additional SR&ED tax credit. Corporations carrying on qualifying Industrial R&D in British Columbia will be able to claim an additional 10% SR&ED tax credit, as determined by the CRA audit process.
CRA’S REVIEW PROCEDURES FOR SR&ED REFUNDS
Any company or individual applying for SR&ED ITC’s must provide CRA with technical report(s) that explain what technical work was done, and why it qualifies under the SR&ED eligibility guidelines. As well, they must provide a detailed listing of all financial expenditures that are being claimed for the projects described.
First-time SR&ED ITC filers will generally undergo a science audit and financial audit, as described below:
1. Science Audit:
A CRA science advisor who is a technical person familiar with your field of science will review your claim’s technological information to ensure the Industrial R&D work complies with the SR&ED program’s eligibility criteria.
2. Financial Audit:
Tax department financial auditors validate the SR&ED expenditures and the investment tax credit you claim. They ensure that the amounts you claim and your calculations comply with the legislation.
NOTE: THIS IS NOT A COMPLETE COMPANY AUDIT: CRA ONLY LOOKS AT THOSE EXPENDITURES THAT ARE DIRECTLY RELATED TO THE SR&ED CLAIM
CRA conducts all reviews under strict rules of confidentiality that recognize the sensitive nature of your technical and financial information. CRA usually completes the review process within 120 days of receiving a complete claim.
Subsequent SR&ED ITC claims may not be audited, and be down-screened. However, the supporting documentation for the claim must be retained on file.
ABOUT SOME SR&ED CLAIMS WE MADE IN THE PAST:
Case Study I:
One client is in the fingernail sculpturing and manicuring business. When they entered the business, they quickly discovered they could not find the quality components on the market. As a result, they began developing their own nail products, which involved doing a lot of research. They have now successfully developed over ten different products. As an existing client of our company, he received a package from us regarding SR&ED claim that year. To his great joy, he discovered that he was able to make successful SR&ED claims for research work going back as far as 1998 (no longer possible). He currently receives over $10,000 as a SR&ED claim refund cheque each year, which finances further expansion of the company’s product line.
This case study demonstrates how the SR&ED ITC program can help you grow your business, particularly if it is a small family business.
Case Study II:
Another client of ours is in the Biotechnology business. Prior to our involvement, they were making annual claims of $150,000, which CRA reduced to a mere $5,000 to $10,000 through their rigorous audit processes. After we took over the SR&ED claim, we successfully appealed previous year claims, and received additional refunds in excess of $90,000. Since we took over the SR&ED filing the clients had received over $250,000 per year in SR&ED ITC’s, mostly in the form of a refund cheque.
This case study demonstrates that if you are not an experienced expert in handling the audit and review of SR&ED claims, there is a good chance that you will not get all the eligible SR&ED ITC benefits you are entitled to receive.
Case Study III:
A third client example. The client imports a wide variety of plants from overseas for research and development purposes. They experiment on these plants to test and ensure their suitability for growing in different environments. As soon as they heard about the SR&ED program, they came to us to help them prepare a SR&ED claim. Their initial refund cheque was over $450,000.00. In each of the subsequent year tax filings, they have received an increasing SR&ED ITC refund cheque in excess of $250,000. The Last cheque exceeded $330,000. In other words, in the past five years, they have collected legitimate tax refunds of over $1,600,000 from the SR&ED program. During the difficult business cycle, the SR&ED refund cheques saved the company from bankruptcy.
This case study demonstrates the tremendous value SR&ED ITC’s can bring to your company, to the point of saving you from insolvency.
KEYS TO SUCCESSFUL SR&ED REFUNDS
1) Be able to differentiate your routine technical work from your SR&ED eligible work.
2) Develop proper science reports using technical people expert in preparing and defending SR&ED claims.
3) Collect the financial documentation to support the financial expenditures. It is critical that this information is detailed and reasonably well presented to support the claim during the subsequent audits. For ongoing SR&ED claims, the supporting documentation needs to be accessible in a format that gives the auditor the exact information they need to approve the claim. This requires a proper SR&ED tracking system.
4) Full support by SR&ED technical and financial experts throughout the complete audit process. This ensures that auditor challenges to the claim are met with appropriate additional information that will lead to maximizing your legitimate refund.
5) In summary, have an experienced SR&ED team working for you to protect your interests, to ensure you receive all the benefits you are entitled to.
HOW WE CAN HELP
We offer the following services relating to the SR&ED program:
1. Establishing Criteria for Differentiating SR&ED work from SR&ED Eligible Work:
We work with your technical people to understand the whole spectrum of technical work that occurs in your company, and through a systematic process, establish a set of criteria that will allow your company to identify projects where eligible SR&ED work may be occurring.
2. Identifying Eligible R&D Projects:
Apply the criteria developed in 1 and determine what project work is deemed eligible SR&ED work. Review what supporting evidence is available to support the research work.
3. Preparing claims for R&D Tax Credits:
We assist in:
- Preparing the science reports describing your R&D activities,
- Determining the amounts of eligible expenditures and activities,
- Preparing the required tax forms, - Working with you through the complete audit process, and
- Analysis and review of claims for R&D Tax Credits, for taxpayers who are in a position to prepare their own claims for R&D tax credits.
4. Developing your own internal SR&ED Program: The focus of our services is to create a research and development work environment that will ensure companies realize maximum benefit from the SR&ED program. This is achieved by establishing a minimally intrusive internal SR&ED process that mimics the Agency’s. It ensures that all your eligible projects are identified, and all the requirements for a successful SR&ED ITC claim are met. The optional services include:
- Techniques for separating routine technical work from eligible SR&ED work. This service ensures all eligible projects are properly defined. It minimizes the possibility of an unsatisfactory audit by Revenue Canada (CCRA), and denial of eligible SR&ED ITC’s.
- A User-friendly browser-based SR&ED software system that provides companies the means to capture all vital scientific and accounting information for a successful SR&ED claim. Essentially, it is a secure on-line electronic research logbook with multiple levels of back up.
- Periodic monitoring of the internal SR&ED process, to ensure it complies with CCRA (Revenue Canada) requirements. The reviews ensure all eligible activities and expenses are correctly tracked, and minimize the possibility of a CCRA (Revenue Canada) auditor undermining the validity of the project.
The SR&ED ITC program offers Canadian companies the opportunity to reduce their Industrial Research and Development costs for R&D work in Canada. For Canadian Controlled Private Corporations (CCPC) in BC the tax credit will be a refund or a tax credit, based on taxable income, amounting to 68% of eligible internal labour cost, and 41.5% for other eligible costs. For publicly traded companies SR&ED tax credits are not refundable, amount to 41% of eligible internal labour cost, and 28% for other eligible costs. We can create for you a research and development work environment that will ensure you achieve maximum benefit from the SR&ED program.
GST and HST
Many of our clients are responsible for collecting and submitting GTS/HST. We can assist your company in the compilation of information and preparation of GST/HST returns.