Talking Sustainability? Think Tax Incentives.

What company servicing Canada’s beleaguered oil and gas sector wouldn’t stand to benefit from a sizeable tax break just about now?

Even rudimentary research and development work in most Canadian industries can qualify for the federal government’s Scientific Research and Experimental Development tax credit program, among other tax incentives. That’s why determining your company’s eligibility is well worth exploring with the tax professionals at Collins Barrow Calgary LLP.

Recognizing that innovation — by opening the door to new growth opportunities — is the cornerstone of business and the future of environmental sustainability, the Canadian government created SR&ED tax incentives. They’re designed to encourage and reward companies engaged in developing new products and enhanced processes and technologies.

Yet with oil prices so depressed, companies in the industry are taking a hard look at the cost side of their businesses. Despite all the exciting innovations in the R&D space, many are naturally reluctant to take chances on investing in new products and services.

“Being open to change doesn’t only make sense, it makes dollars and cents,” says Terry Booth, FCA, CF, a partner with Collins Barrow Calgary and widely considered an industry leader in Western Canada’s technology and innovation fields. Before returning to public practice, Terry served as Chief Financial Officer of several early-stage technology companies, including a publicly-traded biotechnology company.

“It’s time for technology companies serving the oil and gas sector to learn what tax incentives are out there so they can pull out of the tough times stronger than ever,” he notes. “The fact is, they’re probably already conducting qualifying R&D work but, lacking professional tax guidance, are failing to take full advantage of existing federal and provincial government tax incentive programs.”

Knowing what you can claim under the SR&ED program, for example, requires an in-depth understanding of the eligibility requirements, a rigorous approach to understanding a company’s future expenditure plans, and a thorough knowledge of the application and filing processes.

Eligible private companies can recoup more than 40 percent of qualifying expenditures in the form of cash refunds, while larger private and public companies can receive tax credits amounting to well over 30 percent of their expenditures. What’s more, rather than losing any previously unused SR&ED tax credits, they can be carried back for 3 years and forward for 20 years. Plus, for certain Canadian-controlled private corporations, the credit is refundable even if no tax is owed.

Nor does the support available to clients of Collins Barrow Calgary end with navigating the complexities of SR&ED claims and other available tax credits. We advise emerging and established midsized enterprises on debt and equity financing, succession planning, and cost and revenue controls so they can gain the financial traction they need to increase stakeholder value, grow, and compete.

For genuine insights, combined with objective, actionable audit, tax, and advisory advice, turn to Collins Barrow.

Author Chris Coben, CA, is a manager with Collins Barrow Calgary LLP. Terry Booth can be reached at 403.298.1597 or by email at tdbooth@collinsbarrow.com.