Category Archives: Canadian Tax Credit News

Season’s​ ​Greetings​ ​from​ ​your​ ​friends​ ​at​ ​TCA!

Tax Credit Advisors BulbWith​ ​all​ ​the​ ​news​ ​developing​ ​in​ ​Washington​ ​about​ ​the​ ​proposed​ ​tax​ ​overhaul,​ ​it’s​ ​important​ ​to remember​ ​that​ ​the​ ​existing​ ​tax​ ​rules​ ​are​ ​fully​ ​in​ ​place​ ​for​ ​the​ ​2017​ ​filing​ ​year.​ ​That​ ​means​ ​that when​ ​you’re​ ​filing​ ​your​ ​taxes​ ​next​ ​year,​ ​it​ ​is​ ​important​ ​to​ ​consider​ ​the​ ​federal​ ​Research​ ​Credit and​ ​the​ ​various​ ​state​ ​credits​ ​that​ ​might​ ​also​ ​apply.

The​ ​federal​ ​research​ ​credit​ ​dates​ ​back​ ​to​ ​1981,​ ​and​ ​you​ ​can​ ​expect​ ​to​ ​receive​ ​tax​ ​credits​ ​for eligible​ ​experimental​ ​development​ ​costs​ ​that​ ​your​ ​business​ ​performed​ ​during​ ​the​ ​2017​ ​filing year​ ​that​ ​are​ ​properly​ ​documented.​ ​This​ ​important​ ​incentive​ ​program​ ​​can​ ​amount​ ​to​​ ​​as much​ ​as​ ​​ten​ ​percent​​ ​of​ ​your​ ​qualified​ ​spending​ ​on​ ​people,​ ​materials,​ ​and​ ​related​ ​investments dedicated​ ​to​ ​figuring​ ​out​ ​how​ ​or​ ​whether​ ​you​ ​can​ ​make​ ​something​ ​new​ ​or​ ​improved​ ​by experimental​ ​means.​ ​This​ ​applies​ ​not​ ​only​ ​to​ ​new​ ​products,​ ​but​ ​also​ ​to​ ​improved​ ​ones,​ ​as​ ​well as​ ​new​ ​and​ ​improved​ ​processes,​ ​software​ ​and​ ​equipment.​ ​Also,​ ​because​ ​this​ ​is​ ​a​ ​tax​ ​credit​ ​and not​ ​merely​ ​a​ ​deduction,​ ​the​ ​credit​ ​value​ ​results​ ​in​ ​a​ ​​dollar​ ​for​ ​dollar​​ ​reduction​ ​in​ ​your​ ​tax​ ​bill!

In​ ​addition​ ​to​ ​the​ ​federal​ ​credit,​ ​numerous​ ​state​ ​credits​ ​are​ ​also​ ​in​ ​place.​ ​No​ ​matter​ ​where​ ​in​ ​the US​ ​you​ ​are​ ​located,​ ​we​ ​would​ ​be​ ​happy​ ​to​ ​help​ ​you​ ​figure​ ​out​ ​whether​ ​you​ ​qualify​ ​for​ ​these programs,​ ​and​ ​to​ ​help​ ​you​ ​file​ ​successful​ ​claims​ ​if​ ​you​ ​do.​ ​These​ ​federal​ ​and​ ​state​ ​benefits​ ​are intended​ ​to​ ​encourage​ ​companies​ ​to​ ​keep​ ​engineering,​ ​manufacturing,​ ​and​ ​software​ ​jobs​ ​here in​ ​the​ ​United​ ​States.

Things​ ​to​ ​keep​ ​in​ ​mind​ ​when​ ​considering​ ​research​ ​and​ ​development​ ​tax​ ​credits​ ​here​ ​in​ ​North America:

Many​ ​industries​ ​benefit​ ​from​ ​Research​ ​and​ ​Development​ ​tax​ ​credits

It’s​ ​important​ ​not​ ​to​ ​discount​ ​your​ ​industry​ ​just​ ​because​ ​it​ s​​eems​ ​​like​ ​you​ ​might​ ​not​ ​qualify.​ ​Any company​ ​that​ ​engages​ ​in​ ​experimental​ ​development​ ​can​ ​be​ ​eligible.​ ​The​ ​important​ ​thing​ ​is​ ​that the​ ​experimentation​ ​must​ ​be​ ​intended​ ​to​ ​develop​ ​or​ ​improve​ ​an​ ​existing​ ​product​ ​or​ ​process.​ ​For example,​ ​even​ ​a​ ​manufacturer​ ​of​ ​wire​ ​coat​ ​hangers​ ​can​ ​qualify​ ​so​ ​long​ ​as​ ​the​ ​aim​ ​of​ ​the experimental​ ​effort​ ​is​ ​to​ ​develop​ ​a​ ​new​ ​or​ ​improved​ ​technical​ ​capability.​ ​Such​ ​a​ ​company​ ​might try​ ​to​ ​reduce​ ​scrap​ ​rates,​ ​or​ ​improve​ ​cycle​ ​times,​ ​or​ ​reduce​ ​part​ ​weight,​ ​or​ ​engage​ ​in​ ​any​ ​of​ ​a number​ ​of​ ​other​ ​activities,​ ​all​ ​of​ ​which​ ​can​ ​be​ ​eligible​ ​for​ ​tax​ ​credit​ ​support.

Your​ ​company​ ​does​ ​not​ ​have​ ​to​ ​be​ ​of​ ​a​ ​certain​ ​size​ ​to​ ​be​ ​eligible​ ​to​ ​claim​ ​research​ ​and development​ ​tax​ ​credits

Big​ ​or​ ​small​ ​businesses​ ​can​ ​claim​ ​tax​ ​credits,​ ​as​ ​long​ ​as​ ​the​ ​processes​ ​they​ ​are​ ​developing​ ​and testing​ ​meet​ ​the​ ​eligibility​ ​criteria.​ ​Millions​ ​of​ ​tax​ ​credit​ ​dollars​ ​are​ ​left​ ​on​ ​the​ ​table​ ​every​ ​year because​ ​many​ ​companies​ ​think​ ​they​ ​are​ ​too​ ​small​ ​to​ ​claim​ ​these​ ​credits.​ ​Large​ ​conglomerate corporations​ ​aren’t​ ​the​ ​only​ ​ones​ ​that​ ​can​ ​perform​ ​research​ ​and​ ​receive​ ​funding.​ ​It’s​ ​important to​ ​know​ ​that​ ​even​ ​your​ ​small​ ​business​ ​can​ ​compete​ ​and​ ​claim​ ​research​ ​and​ ​development​ ​tax credits​ ​as​ ​well.​ ​Most​ ​US​ ​taxpayers​ ​who​ ​engage​ ​in​ ​experimental​ ​development​ ​can​ ​qualify regardless​ ​of​ ​company​ ​size.

Canadian​ ​companies​ ​can​ ​also​ ​benefit​ ​from​ ​tax​ ​credits

We​ ​also​ ​offer​ ​our​ ​services​ ​in​ ​Canada,​ ​where​ ​the​ ​federal​ ​Scientific​ ​Research​ ​and​ ​Experimental Development​ ​(SR&ED)​ ​credit​ ​serves​ ​a​ ​similar​ ​purpose.​ ​A​ ​number​ ​of​ ​provincial​ ​credits​ ​are​ ​also available​ ​and​ ​we​ ​would​ ​be​ ​happy​ ​to​ ​help​ ​you​ ​navigate​ ​the​ ​rules​ ​and​ ​requirements.​ ​This​ ​is​ ​all about​ ​keeping​ ​jobs​ ​here​ ​in​ ​North​ ​America!

As​ ​always,​ ​Tax​ ​Credit​ ​Advisors​ ​is​ ​here​ ​to​ ​help.​ ​If​ ​you​ ​want​ ​to​ ​find​ ​out​ ​if​ ​your​ ​company​ ​is​ ​eligible for​ ​research​ ​and​ ​development​ ​tax​ ​credits,​ ​we​ ​can​ ​assist​ ​you.​ ​Contact​ ​us​ ​today​ ​to​ ​get​ ​started.

CRA Continues Support for SR&ED Claims

Canada Revenue Agency continues to issue new guidance regarding requirements for submission of supporting documents relating to claims for tax credit support. Recent regulatory changes have provided new guidance for those seeking to claim benefits. For example, the requirement for separate and distinct reports to be submitted for each and every project claimed has been revised.

More information about this and other recent developments can be found at CRA’s web site.

CRA Now Requires More Information About Claim Preparation

As part of an ongoing and important effort to ensure that government incentives are properly allocated, CRA guidance issued in March, 2013 clarifies that all claimants must declare whether they employed a consultant to help with their SR&ED claim preparation, and if so, to name that consultant. This action is in direct response to observed abuses of the program by those who would twist the rules for personal gain. It is of vital importance to ensure that those who help you with your claim preparation are above reproach. TCA has always supported such efforts and will never charge a contingent fee. Our engagements are dedicated to finding the true extent of eligible SR&ED activities.

CRA Announces New Claim Procedure

CRA has recently implemented a new Form T661, along with modified instructions. By making it easier for businesses to apply for the SR&ED tax credit, it hopes to encourage Canadian research. The SR&ED program is now offering a web based eligibility self-assessment tool and has also produced updated electronic and printed information for new and existing claimants.

As explained during informational sessions sponsored by CRA over the past few years, the Scientific Research and Experimental Development program continues to receive strong support. Claim volumes are up sharply as more and more companies become aware of the program and its benefits. In addition, service times per claim are decreasing for all claim categories. The reduction in claim review time is due in significant part to the dedicated focus brought to bear by the program administrators throughout the country.