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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
R and D tax credits in Canada often have business owners and financial managers feeling they are on a much longer journey than perhaps it really is. For the SRED research tax credit, the end of the road is, of course, receiving your cheque. That combo of real/imaginary waiting can be significantly shortened by financing your SR&ED claims. Let's dig in.
SR&ED (Scientific Research & Experimental Development) credits require your claim to be accepted and adjudicated by CRA. While some view the mechanics of the claim as a form of paper ' torture ', probably closer to the truth is that thousands of claims by firms ( including your competitors ) are approved annually, and Billions are refunded in the form of .. you guessed it.. real money!
We don't have the figures on firms that file every year as a part of their ongoing processes for improvement in their products but those firms that do have clearly mastered the process. SHRED claims are all about your firm investing funds in solving real and practical problems. In many cases, your might also contract out to other Canadian businesses a part of that R&D, and those expenses are also eligible under the program.
Until you choose to finance your claim, they are a couple of ' key players ' in your research tax credit process. That includes your SR&ED consultant and your accountant, who prepare and file your claim, respectively. While we might consider filing the claim with your annual financial return as fairly straightforward, your Sred consultant's preparation is key to both maximizing and legitimizing your refund.
The actual financing of your claim is a very straightforward process - it's all about receiving, in the form of a bridge loan, 70% of the total amount of your combined federal/provincial refund. By the way, many claimants have already promised a portion of their claim to their SR ED consultant, as the majority of these firms work on a contingency basis -taking on the full risk and cost of preparing a claim.
It goes without saying that ' big is better ' in Sred claims, but almost all claims are financeable if they make economic sense to both the borrower and the lender in terms of cost.
The wide variety of firms that both prepare and choose to finance claims is very varied. While software firms seem like they might dominate the industry, the reality is that every industry in Canada is, in fact, eligible to both submit, and if they choose... finance a claim.
Financing an SR&ED research tax credit can be achieved in a matter of weeks. Funds your company receives can be used for any general corporate purpose, including, of course .. more R&D. The additional attraction of an SR ED loan is that there are no payments during the duration of the loan – it has a balloon payment structure coinciding with the receipt of your refund.
Financing the SRED research tax credit eliminates waiting for a refund. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can facilitate accessing the ‘real money ‘in your SR&ED refund.
Stan Prokop
