Layoffs are an inevitable part of the economic downturn. With decreased revenue, business owners are forced to
reduce their workforce. Loosing employees is highly unpleasant - the side effects often include (but not limited to) lower morale, decreased
efficiency, and loss of valuable and talented people and their skills.
Government funding, available through SR&ED may help you get the resources your company needs to avoid laying people off - and survive
the economic crisis all together.
How to get the funding?
SR&ED reimburses companies for shop-floor experimentation and development
expenses. This includes modification/customization of equipment,
overcoming technical challenges, meeting unique customer requests, and advancing in-house technical skills.
Up to 68% of qualified payroll expenses could be refunded. As I wrote in the previous article, $4
billion funding is available to Canadian Businesses.
A practical example:
- John runs a print shop, with 6 employees. His payroll expenses for the fiscal year ending in 2008 was $250,000 (including
himself).
- During
that year, a large client approached John, with a unique request to re-print some art work on a special type of silk.
- The order required physical
modifications to the printer, finding the right type of ink and the right temperature (exact specifications and how to do all of that were
previously unknown), and several other challenges were encountered on the way.
Working with a SR&ED tax credits consultanting company, John realized that:
- $50,000 of his payroll was dedicated to this client - and the development of the process.
- $20,000 was spent on various types of ink and
other materials - used in the experimentation and development work.
- The SR&ED consultant indicated that 68% of the payroll and 41% of the materials
expenses should be reimbursed, and prepared a detailed application, describing what was done, when and how. Together with an expert financial
advisor, who prepared the financial part the application was made.
4 months after the claim was submitted by the SR&ED consultant, John received two cheques from the government (Federal and Provincial)
for the total amount of: $42,200.
Happy about the unexpected funding, John was able to retain an employee he was about to let go.
The slow season, and the ability to apply
for the funding again next year, lead John to think - about his next development project - after all, staying on top of technology,
and developing new skills is the only way modern business can survive and remain competitive, and this is precisely what SR&ED is all about!
Contact the Tax Refunds Credits company for your FREE consultation.
Return to: SR&ED claims related articles
Revised:
November 13, 2009
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