Startup businesses can often overlook high end tax planning and advice. Not having enough time or initial cash flow leads a lot of owners to delay retaining a professional accountant. When government incentives are involved this can be an even costlier mistake than usual. Scientific Research and Experimental Development expenses can be a valuable source of cash flow that will expire if not applied for in a timely manner. If you or someone you know is in this position contact us for a free 1/2hr consultation.
Generally, a Canadian-controlled private corporation (CCPC) can earn an investment tax credit (ITC) of 35% up to the first $3 million of qualified expenditures for SR&ED carried out in Canada, and 20% on any excess amount. Other Canadian corporations, proprietorships, partnerships, and trusts can earn an ITC of 20% of qualified expenditures for SR&ED carried out in Canada.
Generally, a CCPC with a taxable income in the immediately preceding year that does not exceed the qualifying income limit may receive a portion of the ITC earned as a refund, after applying these tax credits against taxes payable.