The number of Canadians filing for bankruptcy and unemployment benefits rose significantly in January, according to new numbers released Tuesday by The Office of the Superintendent of Bankruptcy Canada.
More than 117,000 Canadians filed for bankruptcy over the period of twelve months ending January 2009. This denotes an increase of 15.8 % from the previous year. Nationally, the number of Canadians who filed for EI increased to more than 500,000 for January, according to Statistics Canada. Our unemployed Canadians filing for financial help is now 23% higher than it was in February of 2008.
Both the rapidly increasing bankruptcies and EI claims are signs of escalating troubles faced by Canadian citizens as the recession here deepens. And it’s not just individuals facing worry, but businesses as well.
In January of this year, 567 firms pulled the plug on their operations and filed for bankruptcy. Ontario manufacturing bankruptcies also rose 24%. Business insolvencies rose severely in Quebec, where the recession is strongly hitting the province’s industrial sector. 250 companies closed their doors in January, up from 202 closures in December of 2008.
How can individuals cope with job loss? Apply for EI as quickly as possible. The process takes time to be finalized, so the sooner you do, the less you’ll have to dip into savings. If faced with having to pay high prices for prescription medication after losing benefits, programs such as Ontario’s Trillium Drug Program can help cover these expenses.
Businesses can look at cost cutting where feasible, look for opportunities to expand their services to stable or growing sectors, and seek financing from federal and provincial funding programs (such as SR&ED or SMART). Companies on the brink of bankruptcy can look at Turnarounds and seek assistance from an experienced professional.
Source: Statistics Canada
The current economic recession has proven to hit even harder than many economists anticipated. An estimated 129,000 Canadians lost their jobs in January alone, of which Statistics Canada reports that Ontario workers lost a staggering 71,000. Alberta, once a thriving, profitable province, is even feeling the blow, having recently announced another 15,000 jobs lost. Forecasters predict a loss of yet another 250,000 manufacturing jobs over the next five years if the Canadian manufacturing sector follows similar trends occurring within the developed industrialized nations.
For several industries, there is little to no chance of a significant sales increase in the near future. With businesses grasping at straws to stay afloat in this downturn, it is more critical than ever to find a way to increase revenue.
Canada is internationally heralded as a leader in R&D funding for domestic-owned small to medium sized enterprises. The SR&ED program (Scientific Research & Experimental Development) is one avenue that businesses, especially manufacturers, can pursue to improve their bottom line. The goal of the federal SR&ED program is to encourage experimentation and technological advancements within Canadian companies, and this is of particular benefit in the recovery of our economy.
“Companies need to sit back and assess their individual circumstances. It’s time for a second look at the SR&ED process, whether you’ve claimed previously or not.” says Ajay Sinha, VP Operations with Northbridge Consultants. “That old adage is true – knowledge is power. In regards to capitalizing on the benefits of SR&ED, it is worthwhile to seek assistance from a reputable SR&ED consultant.” Sinha is reminding clients that the CRA has hired more auditing staff and made many revisions to the T661 and filing process. He emphasizes that navigating the maze of technicalities correctly is imperative to maximize the size of your claim, and increase the rate of approval to enlarge the dollar amount of returns or tax credits. “It’s a sink or swim situation.”
Sinha mentions that “For those who have had a negative experience or have been disappointed with the results, it is often due to qualifying activities that have been overlooked, and thus not claimed for, resulting in a much smaller return, or in some cases, rejection of the claim.”
Many companies use their SR&ED returns of offset incurred development costs. Alternatively, funds can be invested in new equipment and materials, new hires, or even facility expansion. Sinha adds “We also teach our clients how to track their future eligible activities to make documentation for claims easier and more substantial. This promotes repeated success with the program in the future. The extra resources to put towards the advancement of technology also give Canadians that edge above competitors internationally.”
In 2008, quite a number of changes took place regarding the SR&ED program. For one, the CRA hired a slew of auditors for SR&ED, increasing the likelihood that a technical and financial reviews will take place, no matter how solid the claim. For some businesses, especially first time claimants, this has proved to be daunting in attaining a significant return.
It is now more important than ever to have strong, solid, properly documented projects and to know one’s way through the maze that is the new T661 forms. When it comes to describing project activities, you are now limited to 1400 words as opposed to a full twelve page narrative. If the necessary requirements of technological uncertainty and advancement are not adequately supported, claims run the risk of being rejected, or at least of having certain activities disqualified, thus reducing the size of any return received.
Fortunately for rejected claims, if the 18 month period after fiscal year end claimed for has not expired, an objection can be submitted to the CRA within 90 days of receiving the notice of assessment. if you feel that your project does in fact meet SR&ED requirements, it may very well be worthwhile to pursue an appeal. The CRA outlines the appeals process on their website at:
http://www.cra-arc.gc.ca/txcrdt/sred-rsde/pblctns/p2000-02r-eng.html#tphp
All in all, the hassle of submitting objections and pursuing an appeal is time consuming. This can be avoided altogether with the use of a consulting expert. An experienced SR&ED consultant assess projects and handle the filing for you can be extremely valuable. In addition, should claims be called to review, Northbridge Consultants readily will accompany you to the CRA review location. While it is necessary that you attend and represent your projects, Northbridge provides assistance in the defense of any activities or documentation that may be disputed by the auditor.
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