New SR&ED Enforcement Measures Announced

Posted on March 31, 2013 by admin

The 2013 federal budget has announced new compliance measures to monitor the advice provided by SR&ED practitioners.  The following measures were proposed by the federal budget:

  1. The Business Number of each SR&ED practitioner will be required with each SR&ED claim, along with details regarding the relevant billing arrangement
  2. A new $1,000 penalty will be levied in situations when information regarding third parties that assisted with claim preparation is missing, incomplete, or inaccurate.  The taxpayer and the SR&ED practitioner may be held jointly liable for the penalty.

It is anticipated that the CRA will target the claims of taxpayers which have been prepared with the assistance of SR&ED practitioners that have been identified as advocating aggressive filing positions.

Posted in Changes to SR&ED | Leave a comment

Reduction of SR&ED May Have Negative Impact on Oilsands Cleanup

Posted on March 18, 2013 by admin

According to a report by Geoff Dembicki of the TheTyee.ca, the cuts of SR&ED tax credits will erode the ability of fossil fuel producers to reduce their environmental footprint.  Bob Bleaney of the Canadian Association of Petroleum Producers (CAPP) reasons that oil and gas producers need to continuously improve on environmental and social performance.

In 2007, the federal government provided approximately $305 million worth of tax credits to oil, gas, and mining companies to offset costs related to technology and innovation.  However, the 2012 federal budget has trimmed its support for the SR&ED program, and once these cuts take effect in 2014, (1) the basic refund rate will be reduced from 20 percent to 15 percent, and (2) oil and gas companies will no longer be able to claim SR&ED on capital expenditures.

Finance Minister Jim Flaherty has admitted that a leaner SR&ED tax credit program is not popular with large businesses who conduct research and development in Canada.  However, Flaherty dismisses suggestions that SR&ED cuts could seriously undermine innovation in Canada.

Gradek Energy, a small Montreal-based cleantech firm disagrees with Flaherty.  President Thomas Gradek believes that the SR&ED cutbacks could increase the cost of large scale projects substantially.  Without the SR&ED program subsidy, pilot projects related to cleaner oilsands will no longer be economically viable.  And without these pilot projects, the expenditures related to a large commercial scale deployment could cost up to 20 times more.

Posted in Changes to SR&ED | Tagged , , , | Leave a comment

NorthBridge Winter 2012 Newsletter – Raising and Allocating Financing For Growth

Posted on March 18, 2013 by admin

Government funding solutions dramatically reduce the risk associated with expansion by allowing companies to make more substantial investments with increased return opportunity, which the company may not have been able to fund on its own. This can translate into machinery with increased production efficiency, infrastructure with reduced costs of maintenance, or promotional materials with increased marketing influence…

[ Read More ]

More from the Winter 2012 issue:

Posted in Uncategorized | Leave a comment

Green Party Leader Argues that Canada Needs to Invest in Innovation and the Clean-Tech Sector

Posted on March 9, 2013 by admin

Environmentalists, such as Elizabeth May of the Green Party, argue that investment into oilsands development should be instead be allocated to innovation in the clean-tech sector. May suggests that growth in the clean-tech sector helps to achieve both economic goals and environmental goals.

Canadian politicians have long supported the oilsands throughout its ups and downs, which has resulted in the recent Alberta budget crisis. The Redford Alberta government is expected to run a $4 billion deficit due to declining oil revenues.

May also points out that Canada’s policy response in the March 2012 budget was met with widespread skepticism. During this budget, the SR&ED program was overhauled – funding was taken away from the SR&ED program and made available for direct grants. The “picking of winners” by government has an empirically lousy record.

May believes that as long as Canada’s policies continue to stress the non-renewable resource sector, Canada will continue to under-perform globally in the commercialization of new research and development technologies. Canada needs to devise a strategy that (1) invests more in innovation, and (2) is decoupled from non-renewable resources via further investments in green energy technologies.

Posted in Changes to SR&ED | Tagged , , , , , | Leave a comment

How a Canadian Startup Thrived Without VC Investment

Posted on February 26, 2013 by admin

Uberflip’s Randy Frisch explains in his blog post how he adopted 5 key strategies which have allowed him to avoid institutional funding.

1. Recurring revenue

Creating a stream of recurring revenue allow you to structure your business growth.  Monetize your business with a scalable price structure.

2. SR&ED

– Do you need to be profitable and/or paying corporate income tax to get up to a 42% SRED refund? NO
– Do you have to pay back the government when you are profitable? NO
– Does the Canadian government get any equity in my business? NO

3. Government Grants

There are a multitude of Canadian business grants available to startup companies, and many will reimburse you as quickly as a month after the expense was incurred.

4. Sacrifice and Confidence

Sacrificing some salary now will allow you, as an entrepreneur, to grow your company faster, and allow you to add additional members to your team.

5. Scale

Build a scalable business model.  Without a plan that breaks even in a reasonable time span, you will never be able to find a VC who is willing to listen to your story.

Posted in SR&ED financing | Tagged | Leave a comment