Canadian business owners and financial managers who are not as conversant with Canada’s SRED program as much as they would like to be pose three major questions when we sit down with them and talk about SRED ( aka (Sr&Ed) and Sred
1. What is the program – am I eligible
2. How long will I have to wait for the money
3. How can I monetize of cash flow my sred claim for immediate working capital now?
Let’s examine the basic thing you need to know around those three key areas.
1. Canada’s Sred program is without a doubt the most powerful program when the business owner asks themselves – ‘ What assistance is available in the form of government loans and grants ‘ – a typical question often asked by every Canadian business owner. And the good news is that not only is the Sred program available to virtually every type of industry in Canada, the funds coming to you under that program are non – repayable. The program basics are simply that Sred was set up to encourage innovation in products, technology, and business processes. A very heft ‘rebate ‘comes back to your firm in the form of a large percentage of the actual expenses you have incurred in the research and development area. Naturally for many businesses R&D is the key driver that allows your firm to stay competitive and ahead of the pack, so the ability to recover a large part of those expenses at the governments cost is a huge benefit to Canadian business. And when you are able to both file a Sred claim and be armed with the knowledge that it is financeable is clearly a powerful win win strategy.
Many business owners are also not aware that the credit can be claimed for the previous two years, so this is one case where playing catch up is a good thing. To determine eligibility for a Sred speak to your accountant or what is known as a Sred consultant.
2. ‘So when does our firm get the actual money ‘?’ is one of the next major questions customers pose. Here are the basics around that issue. Naturally do receive funds you have to file your claim – this is done at the time you and your accountants submit your year end corporate tax filings. In fact the Sred claim must in fact be filed at this time to maintain your eligibility. The key issues you have to know about are that you want to ensure you have a claim that is filed in a timely fashion, as per above. At the same time focus on the quality of your claim – by now you should be working closely with your accountant or Sred consultant to ensure you claim is properly documented. Recent new process at Canada Revenue Agency are clearly, in our opinion, focus on weeding out the ‘wheat from the chaff’, so to speak. You want to ensure your claim has been filled out with the proper form – there is even an online process you can utilize. Your ability to succinctly make your claim, and, as importantly, back it up with the proper documentation will ensure much higher probability of approval. In some cases the claim might be partially disallowed if rationale, submission style, and back up info don’t conform to what the Sred folks want to see.
3. Now lets focus on what to most of our clients is the most important aspect of the Sred program process – which is ‘getting the money ‘! Here we advised clients you have two options, you can wait for the cheque which may take months and in some cases a year, or you also have the option to
So now you have taken a double advantage of one of Canada’s best programs for business – you have filed and received approval for a non repayable grant for a significant portion of your r&d expenses, and, as importantly you have monetized or cash flowed that claim. That’s great Canadian business follow through.