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SR&ED Tax Credits Are Under Attack! Financing SR ED claims Is Business As Usual – How SRED Finance Works

Guest post by: Stan Prokop

Article Overview: Information on financing sr&ed tax credits and why sr ed financing of claims is still an efficient and straight forward process when your firm has a valid sred tax credit receivable .

SR&ED Tax Credits Are Under Attack! Financing SR ED claims Is Business As Usual – How SRED Finance Works

Whew! It's getting ugly out there! Canada’s sr&Ed Tax credits are under attack in a number of different manners. We'll review some of those criticisms and prove to you that financing sr Ed claims is totally... business as usual... if, and its a big if, you know what you are doing.



A recent Canadian national headline story screamed ' flawed r&d scheme cost taxpayers billions '. First of all, it’s not a scheme... it’s a program. (I am secretly hoping my old age pension is not a scheme) We're talking of course about the Canadian Scientific Research and Experimental Development Program - aka ‘SR ED ', 'SR &ED '.



The program has gained significant traction over the years, and not hard to understand why, when the essence of the program is that Canadian privately controlled firms are the recipients of billions of dollars of funding every year, in the form on a non repayable, real money cheque for a large percentage of their research and development. Thousands of firms all across Canada apply every year.



At its essence the program is clearly ' apple pie ' and ' motherhood ' - simply Canadian firms investing hard earned dollars in research of products and processes to further their competitive positions here in Canada, and of course globally, where it counts .



So whats the problem. It's hardly late breaking news to us, but the core issues around the current ' sr ed claims crisis seems to focus on who is preparing them , the dollars that are sometimes wasted or abused in that process, and the governments inability to validate every claim to the level they would perhaps like to .



Who would not agree as a taxpayer or a reasonable person that we would all prefer our tax dollars to be going to programs and things that work. That brings us around to our other core subject area - the financing of sr&Ed tax credits.



Firms in Canada have the option of either waiting for their cheque, which can takes months to a year, of monetizing their claim immediately for cash flow and working capital. In many cases this is the largest one time amount of funds that many new and emerging companies receive.



So why isn’t their a concern over sr Ed financing? That’s because it’s a common sense process based on the quality and size of your claim. A typical financing involves a straight forward business application, with copies of your technical claim and tax filing showing the sr&Ed tax credit has been filed. We spoke of the sred consultants that have proliferated the industry - the reality is that your claim is finance based on its having been prepared by a credible consultant with an industry reputation and experience. Even CRA, formerly Revenue Canada noted that ' the vast majority of claims are compliant '.



When you're financing claims the dollars count. The program itself allows for approximately 35% of your total R&D expenses as a total claim, as validated by yourself or your consultant. When you finance your claim you receive approximately 70% of your total claim as a bridge loan that balance held back as a buffer, and remitted back to yourself less financing costs.



Is there a bottom line? We sure think there is. Take advantage of a legitimate and great government program (not scheme!). Prepare your claim with the aid of a reputable expert consultant with credentials and expertise. If you wish to finance your claim seek the services of a trusted, credible and experience Canadian business financing advisor who will efficiently guide you through the financing process - straight to cash flow in the bank!

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Article Tags: financing claims, sr ed, sred, sred tax credits



Related Forum Posts
Research & Development Tax Credits - If anyone is involved in any sort of R&D I have a contact that can submit an application for you to the Government of Canada to get back upto 80% of expenses you may have incurred. Best of all - all this at no cost to you. She's worked with companies of all sizes and part of her services, which are included is how to structure yourself in the future to continue to receive these Government Tax Credits. She can even go back to the last three years in your books to get Tax Credits refunds as well. Email me and I can share her details with you.
Re: Finance is the primary requirement of business - [quote="rauljoseph":36x8dadn]Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.[/quote:36x8dadn] Good point. I'll just add that if I was going into business for myself and could only have one skill it would be Sales & Marketing. You need to be able to create customers first and foremost. Finance is more of a support function for entrepreneurs.
Finance is the primary requirement of business - Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.
Life of claims! - Hello, Although we all know that the life of any patent at the uspto is 20 years, I have another concern about as to weather a patent can be renewed by just appending a few unique claims just before it expires. For example, say I was granted a patent in 1990 and in 2009 I decide to further protect some of those claims so no one can use them for another 20 years. Therefore am I allowed to create a new product very similar to the original one patented in the 1990 and append a couple of new and original claims to it and re-patent it in 2009 thus allowing a better version of the original product to be patented for another 20 years. If the 2009 patent gets granted, would the original claims included in the 1990 patent be valid and protected for another 20 years? Thankyou all for your feedback! With regards Rob
re: restaurant start-up - I'm not sure about government grants for restaurants, but my recommendation would be to approach a lender that offers loans under the Canadian Small Business Financing Loan program where the government will guarantee 85% of the loan. You can borrow up to $250,000 to finance equipment and renovations under this program. Restaurants are very risky business, however some of the Chartered Banks will look at restaurants if there is enough of an initial equity investment and you have a solid business plan (experienced management team, good concept and strategic location).


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