Posts Tagged ‘canadian manufacturing’

New CanExport Program to Support Export Market Development

CanExport is a new government funding program announced on January 5, 2016 that will provide $50 million over the next five years in direct funding to Canadian small and medium-sized enterprises (SMEs) to support new export market development.

Through the CanExport program, companies can receive financial support of 50% up to $99,999 for export marketing activities. Eligible activities need to exceed the company’s core activities and focus on promoting international business development. These may include business travel costs, exhibitions at trade shows, market research, adaptation of marketing materials for new markets, and legal fees associated with a distribution/representation agreement.

In order to be eligible for funding through the CanExport program companies must have 1-250 full time employees and $200,000-$50 million in annual revenue declared in Canada. The CanExport program is open to companies in all sectors with the exception of agriculture and food processing, since companies in these industries are already eligible for export funding through the AgriMarketing program.  Export activities to existing markets are not covered by the CanExport program, but still remain eligible for funding from the Export Market Access (EMA) program.

Summary of Provincial and Territorial R&D Tax Credits

The Canada Revenue Agency has recently released the most current summary of provincial and territorial R&D tax credits. Recent program developments by region include:

Manitoba

  • As of January 1, 2014, the definition of ‘eligible expenditures’ has been amended in line with the federal reduction in the prescribed proxy amount to 55%, and the reduction to 80% for contract payments (except contract payments to eligible educational institutions in Manitoba); however, despite the elimination of capital expenditures from the federal tax credit, these costs remain eligible under the Manitoba tax credit.
  • Currently, non-refundable tax credits can be carried back 3 years. Non-refundable tax credits can be carried forward 10 years for tax years ended after 2003 or 7 years for tax years ended before 2004 and applied against the Manitoba income taxes payable. The Manitoba 2015-2016 Budget and Bill 36 propose to extend the carry forward period for non-refundable tax credits to 20 years for tax years ended after 2005.

Saskatchewan

  • The Saskatchewan non-refundable R&D tax credit rate was reduced from 15% to 10% for all eligible expenditures after March 31, 2015.

British Columbia

  • Credit has been extended three years to September 1, 2017.

Quebec

  • As per Quebec’s 2014 budget, all R&D tax credit rates were reduced by 20% for all eligible expenditures incurred after June 4, 2014.
  • A minimum expenditure threshold has been implemented for fiscal years beginning on or after December 3, 2014. With corporate assets below $50 million in the previous year, the first $50,000 of R&D is excluded from eligibility. This minimum threshold will increase linearly up to $225,000 for corporations with assets of $75 million or more in the previous year.
  • All R&D credits (including pre-competitive research, university and public institute research, and research consortium contributions/ rights) have been standardized with the R&D wage tax credit for fiscal years beginning on or after December 3, 2014 to a base rate of 14% (CCPCs with assets below $50 million will qualify for a rate of 30% on the first $3 million of eligible expenditures).
  • In line with amendments to the federal SR&ED tax credit, capital expenditures incurred after 2013 are not eligible. In addition, claims filed after 2013 will be subject to a $1,000 penalty for missing, incomplete, or inaccurate information.
  • As of June 4, 2014, the 10% increase in the R&D wage tax credit for biopharmaceutical corporations is eliminated (previously qualified corporations will continue to receive the benefit at a decreased rate of 8%)

 

The following table provides a breakdown of provincial R&D tax credits as of June 30, 2015.

 

Province/ Program Rate Deadline
Newfoundland and Labrador 15% refundable 12 months after year end
Nova Scotia 15% refundable 18 months after year end
New Brunswick 15% refundable (expenditures incurred after 2003)10% non-refundable (expenditures incurred before 2003) N/A
Manitoba 20% non-refundable (expenditures incurred after March 8, 2005)15% non-refundable (expenditures incurred before March 9, 2005); however, the 2010 Budget extended refundability of the Manitoba R&D tax credit to one-half of eligible expenditures for in-house R&D expenditures not undertaken by an institute in Manitoba and incurred after 2012) 12 months after year end
Saskatchewan 10% non refundable (expenditures after March 31, 2015)15% refundable for all eligible expenditures occurring between March 19, 2009 and March 31, 2012 N/A
Alberta 10% refundable (on up to $4 million in eligible expenses) 15 months after year end
British Columbia 10% non-refundable; refundable for CCPCs up to 10% of the expenditure limit 18 months after year end
Yukon 15% refundable 12 months after year end
Ontario Innovation Tax Credit (OITC) 10% refundable (annual expenditure limit of $3M: Phased out if taxable paid-up capital (PUC) for previous year exceeds $25M or is between $500,000 to $800,000; expenditure limit is eliminated when PUC reaches $50M) N/A
Ontario Business-Research Institute Tax Credit (OBRITC) 20% refundable (qualified expenditures are capped at $20 million annually among associated group of corporations) N/A
Ontario Research and Development Tax Credit (ORDTC) 4.5% non-refundable N/A
Quebec
R&D Wage tax credit; Tax credit on fees paid to a research consortium; Precompetitive tax credits
14% to 30% (after June 4, 2014)17.5% to 37.5% for costs incurred between April 22, 2005 to June 4, 2014  N/A

 

Linking Government Grants to SR&ED: Business Expansion

In order to sustain a thriving economy, the government of Canada continually invests in business growth and expansion through various direct and indirect sources of funding. Over the past five years approximately 35% of Canadian gross domestic expenditure on R&D was financed by both direct and indirect government funding initiatives. Although the majority of financing is in the form of indirect funding, such as the SR&ED tax credit program, the Canadian government has recently increased emphasis on direct government funding sources such as repayable and non-repayable grants. Direct and indirect funding sources can work together to provide solutions for business growth at various stages of advancement from product development to global market expansion, thereby, enabling businesses to continually improve and grow.

Large-scale business expansion projects may be eligible for direct funding in the form of a repayable, interest-free loan through the Investing in Business Growth and Prosperity (IBGP) program. The IBGP program helps established business with global market share potential and innovative prospects to increase competitiveness and growth as well as create jobs by supporting the implementation of new technologies/ processes in addition to expansion of existing markets and facilities.

After the expansion project is complete, eligible SR&ED expenditures related to experimental development can generate indirect funding via Investment Tax Credits (up to 35% of eligible expenditures for CCPC’s and 15% for foreign owned/ public corporations) for costs already incurred. This provides a source of annual funding or tax savings that can be re-invested into innovation and growth.

Various funding opportunities may be leveraged in conjunction to suit the specific objectives and needs of your company. Our NorthBridge team of business analysts can help identify eligible projects for both SR&ED and grant funding programs. We also assist with the completion of application information, the preparation of financial information, the creation of business plans, and the required reporting after application submission.

Success of EMC’s Food, Beverage, and Bio Sector Event in Mississauga

NorthBridge Consultants presented at Excellence in Manufacturing Consortium’s Food, Beverage, and Bio Sector event at Mississauga Civic Centre on Tuesday, June the 16th. The event was well attended by Agri-Food manufacturers and all the attendees left with new knowledge to bring back to their companies. Jen Mahon, our VP of Operations, and Gerry Fung, our VP of Business Services, presented on behalf of NorthBridge. They discussed the SR&ED tax credit program, available government grant and loan programs, how to optimize returns from both tax credits and grants, and relevant case studies.

There were several other speakers in attendance who provided information for the attendees during the morning session. The speakers included representatives from the City of Mississauga, the Ministry of Agriculture, Food, & Rural Affairs, Coldbox Builders, Matt & Steve’s, Colliers International, CPG Executive Search, and ValueStream Solutions. All the presentations were geared towards growth strategies for manufacturers in the Agri-Food sector.

We greatly appreciate the opportunity to collaborate with Excellence in Manufacturing Consortium and to further educate companies about the advantages of government tax credits, grants, and loans.

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NorthBridge Success Story: Ontario Manufacturer Leverages SR&ED Tax Credit to Invest in Product Development

NorthBridge engaged a manufacturer in Brant County that was looking to develop new products and processes for their manufacturing facility. In order to enter new markets and become more competitive, the company was looking to invest in research and development. They had looked into government funding programs but were unaware that they qualified and could be receiving government assistance for their projects. Our team was able to identify projects that qualified for the SR&ED tax credit. The SR&ED program can provide both refundable and non-refundable Investment Tax Credits (ITCs) for labour, materials, overhead, and subcontractor costs related to scientific research and experimental development (SR&ED).

Our NorthBridge team of engineers and technical writers worked with the company to prepare the claim and the project narratives for the R&D projects. As a result of our communication with the company and preparation of the SR&ED claim, the project expenditures were accepted as filed. The ITCs received will be invested in future development projects and will allow the company to stay competitive and reach new levels of success.

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