OVERVIEW – Information on R and D tax credits in Canada . SRED Credits can be financed. Here’s how SR ED financing via tax loans works and why tax credit financing should be considered if you are filing these claims
Tax loans in Canada for SRED Credits – Canada’s R &D refundable credit system seems to pose challenges for some clients that are looking to monetize, via SR ED financing, their claims. Does there have to be a problem? We don’t think so, let’s dig in.
SR&ED credits are available, of course, via the governments ‘ Scientific Research and Experimental Development Tax Credit ‘ program. Although federal budgets in recent years have changed the program significantly from a view point of streamlining the process, certain portions of the allowable refund were also cut back, i.e. capital expenditures relating to the actual R&D.
In Canada the majority of tax credit claims are prepared by independent consultants. These claims are filed of course in conjunction with your year end tax return. Retaining a good preparer for your claim is one part of the financing process of a claim. In the past couple years a lot of focus was placed on the way consultants bill and prepare claims – the majority of which are on a ‘ contingency’ basis which in hindsight probably caused some bad behavior by a small few.
We encourage all clients to both consider whether they are eligible for the SR&ED credit, as well as focusing on filing the claim promptly as there are some deadlines in place under the program
Refundable credits return billions of dollars to Canadian corporations each year. Your ability to cash flow or monetize your claim makes the program complete in some way. Your company is in effect ‘ fast tracking ‘ the return of cash flow to your company by filing and financing your claim.
How then are the claims financed? It certainly doesn’t have to be problematic if you have some expertise backing the process. A simple business application starts the whole process – typical info needed here are a copy of your claim, info on who prepared it, as well as your business financials.
We note here that many firms that complete claims range from start ups to firms that are still in early stages of revenue. So it’s important to understand that the key collateral under a SR ED financing is fact just the claim itself. In effect you’ve created a (government) account receivable and are simply financing /monetizing that specific A/R.
The newest trend in tax loans for SRED is the ability of your business to in effect pre-finance your claim – you are reimbursed for funds you are spending during your spend . That fast tracks the return of R&D capital even faster.
If you’re looking to avoid any ‘ problems ‘ associated with financing SRED CREDITS seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
The probable result – Problem gone!
Author: Stan Prokop – 7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :
7 PARK AVENUE FINANCIAL = CANADIAN SR&ED TAX CREDIT LOAN EXPERTISE
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Direct Line = 905 302 4171
Office = 905 829 2653
Email = email@example.com
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7 Park Avenue Financial
Canadian Business Financing