Scientific Research & Experimental Development Tax Credits
The Canadian Scientific Research and Experimental Development Tax Incentive Program (SRED or SR&ED) provides support in the form of tax credits and/or refunds, to corporations, partnerships or individuals who conduct scientific research or experimental development in Canada.
Does your company qualify?
- Have you developed a new product or improved on an existing product?
- Have you developed or improved on a process?
- Have you developed software?
- Has your company raised the bar on technology or knowledge?
3 criteria have to be met
- You must demonstrate that your company has advanced technology or advanced knowledge that raises the bar in terms of what is standard practice in the industry or your company. Do you always know in advance the outcome of your attempts to improve a product or process?
- You must demonstrate that in attempting to advance technology, you encountered and overcame technological challenges or obstacles by means other than standard practice or routine engineering.
- You must demonstrate that your company overcame these challenges using an experimental approach conducted by knowledgeable and experienced personnel.
The diagram below illustrates the inter-workings of the 3 criteria.
Estate Freezes and Corporate Re-organizations
An estate freeze is a legal estate-planning technique used in Canada to lock in the current value (and tax liability) of a capital property for one person, while attributing the value of future growth of that capital property to another person. This provides taxation, estate planning and business advantages by ensuring current owners (e.g. parents) of an asset can continue to control that asset while allowing other persons (e.g. children) to benefit from (and be liable for the taxes payable on) the increase in value of the asset after the date of the estate freeze.
Practical uses of an estate freeze include transfer of control of a privately held business between generations, deferral of the taxes payable upon the disposition of the shares of that business, income-splitting between family members and protection of assets from creditors. Appreciating assets may be transferred from parents to their children on a tax-deferred basis, with the parents retaining control of the assets during their lifetime.
If you own a family business, retirement isn't simply a matter of deciding not to go into the office anymore. You've got some critical questions to answer like...
"What happens to the business when you're no longer running it?" and
Will you have enough money to retire?"
The family dynamic complicates the whole transition because of the relationships and emotions involved. Most people are not comfortable discussing topics such as aging, death, and financial affairs.
Comfortable or not, succession planning should be a priority for any family business considering that more than seven out of ten family-owned businesses fail to survive the transition from founder to second generation, typically falling prey either to estate taxes or family discord - or both.
Developing and implementing a well-designed succession plan is essential to the survival of a family business from one generation to the next.
We help you with these key issues -
Keeping it in the family. Are you going to pass the business on to your family or sell it to a third party? We help you weigh the advantages and disadvantages of each of these options.
Who's going to run the business when you're gone? Management and ownership are not one and the same. You may decide to transfer management of your business to just one of your children but transfer equal shares of business ownership to all your children, whether they're actively involved in the business or not.
Minimizing the tax bite. The tax burden when transitioning a family business can be significant. The challenge is that a family business is not generally a liquid asset, but taxes are typically due when ownership is transferred.
- Making it fair. Transferring family ownership often adds a tremendous amount of stress to individual family members. We talk with each of the family members to ensure that they feel they a getting an equitable and fair share of the pie.
What we do for you...
Once we understand how you feel about the key issues above, we begin constructing your succession plan focusing on these 5 issues...
- Tax Projections
Let us help you pass on what's taken a lifetime to build by requesting a Free Consultation by calling 905-502-7505 or by contacting us by email.
Personal and Corporate & Trust Tax Preparation
With years of tax return preparation experience, I welcome the opportunity to assist you with the preparation of your Personal (T1) returns, Corporate (T2) returns or Trust (T3) returns, as well as T4, T5 and T3.
T1 Returns include:
- Residents of Canada for part or all of the year
- Individuals receiving income from employment, investments and private or government pensions
- Terminal returns for individuals deceased during the year
- Optional returns for deceased individuals (based on the facts in each situation)
We are proficient in providing the following services relating to your tax filing:
During Tax Season
- Gathering of slips and documentation and an analysis of your personal tax situation to ensure that no claim has been overlooked
- Preparation of entire family’s returns (including spouse and children)
- Preparation of your HST return if you are self employed
- Optimizing family income splitting
- Timely filing of elections
- Electronic filing of returns
- Preparation of Foreign Income Verification Statement if applicable
After Tax Season
- Verification of accuracy of Notice of Assessments
- Preparation of adjustments to previous years’ filings as required
- Handling of correspondence with CRA in the event of an e-file audit or pre-assessment review
- Communicating with CRA on a variety of issues requiring immediate attention
- Paying instalments for clients who are out of the country
- Ongoing discussions with clients regarding tax planning strategies that may present themselves throughout the year
Corporate T2 tax returns
- The preparation of the T2 return can be done in conjunction with the year-end financial statements preparation or on a stand-alone basis, ie if the financial statement is prepared in-house or by your bookkeeper with no further adjustments.
- I optimize your tax advantage by ensuring proper classification of asset purchases to maximize your annual CCA deduction, small business deduction planning within associated corporations, reserves for uncollectible amounts, refundable dividend taxes and all other pertinent deductions.
- Foreign reporting T1134 and T1134 may be required when dealing with either foreign property or controlled foreign affiliates.
T3 tax returns
Family trusts may be required to file an annual return if the trust has earned any taxable income, sold property or made distributions, capital or income to its beneficiaries. T3 slips may need to be issued prior to March 31 and annual return filing may be required by March 31.
Starting a Business
Opening your own business is exciting and thrilling. A methodical plan of action dictates whether a small business will make it or not. Success lies in the approach you take and we help you avoid the pitfalls that many small business owners make when starting.
We help you:
- Select a business structure that best fits your needs by evaluating tax advantages, legal exposure, ease of operation and portability should you need to relocate
- Select the right accounting software by evaluating your budget, needs and hardware
- Establish billing and collection procedures to maximize your cash flow
- Establish procedures to monitor and control costs
- Setup a home office so you can maximize your tax deductions
- Prepare and file all required provincial and local licenses and permits
- Prepare and file your application for your CRA Business Number
- Provide payroll and payroll tax filing when you bring on your first employee
- Comply with employment laws so you don't get hit with fines and unhappy employees