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December, 2009

Case Study: Leather Manufacturer

Leather Products Manufacturer Advanced Technology to Stay Competitive, but Considered their Activities Ineligible for SR&ED!

A leather products manufacturer had never before claimed for SR&ED. Being one of the foremost manufacturers of leather belts, punches and other goods in Canada, their manufacturing processes and operations were large and complex. Having introduced several new products, and having improved their manufacturing processes to stay competitive, they were an ideal candidate for benefitting from the SR&ED program.

However, they felt that there was no “R&D” in the manufacturing of leather goods, and that they would most certainly not qualify. Moreover, they had limited time outside of day-to-day operations to remain dedicated for preparing the SR&ED claim. They were also hesitant to consider SR&ED due to bad experiences in the past with other forms of government funding and CRA audit processes, causing them to avoid the SR&ED program altogether.

As such, they could not have benefitted from the program were it not for Northbridge Consultants.

Northbridge Identified SR&ED Potential!

Northbridge Consultants toured of the client’s manufacturing facilities for identifying past and present SR&ED work. They categorized these project elements, defined SR&ED projects and their scope based on these elements, and identified a core group of leather manufacturing specialists who were, in fact, involved in “R&D”. Northbridge Consultants also assisted in compiling the technical and financial information for the claim.

Claim Accepted as Filed!

The leather products manufacturer experienced success with the SR&ED program by claiming expenditures for their complex scenarios of incremental SR&ED work performed concurrently with commercial production. After Northbridge’s thorough investigation of these activities, the CRA accepted the claim as filed without any adjustments. The return from this claim was highly beneficial for the client’s future development efforts.

This is a factual account of a client's success with Northbridge Consultants. Names have been removed to protect the client.

Calendar of Events - December, 2009

Sun	Mon	Tues	Wed	Thurs	Fri	Sat
		1	2 Complimentary Breakfast in Sudbury	3	4	5
6	7	8	9	10	11 Hanukkah Begins	12
13	14	15	16	17	18	19
20	21 Winter Solstice	22	23	24	25 Christmas Day	26 Kwanzaa Begins
27	28	29	30	31 June 2008 FYE claims due now

Testimonials

"At Kidzpace, we had never claimed under the SR&ED program before coming into contact with Northbridge. They were able to help us not only with the project identification and filing process, but also aided us with the claim during Technical and Financial reviews. Working with Northbridge allowed us to claim expenses for development work which would have otherwise been lost, allowing us to receive a significant refund for our efforts. This has enabled us to continue to invest in our growth through research and development and the SR&ED program."
- Rob Butler – CEO, Kidzpace Interactive Inc.

Kidzpace is the world leader in providing interactive entertainment in various settings. Kidzpace products are found in various restaurants, dental offices, hospitals and other facilities across the US, Canada, Europe and many other countries.
www.kidzpace.com

Vision Statement

To be the premier consulting partner for Canadian businesses by offering personalized services that support client and corporate goals. Our top priority is to fulfill the client's needs through the delivery of service excellence, professional expertise and reliability, the preservation of the utmost integrity, and the passionate encouragement of teamwork and employee development.

Mission Statement

Northbridge provides results oriented consulting services through the development of adaptable and innovative business solutions for firms operating in Canada.

Employee Spotlight: Khaled Jamalalldeen

Position

Director of Business Development

Educational Background

B.A. Hon. Business Communications

Hobbies & Interests

Mountain biking, fishing and hiking through Bruce's Trail and conservation areas are among Khaled's top interests and hobbies. He is also proficient in home improvement projects. From finishing wood to building patios - he will make it right.

Biggest Non-work-related AccomplishmentKhaled's extensive travel through Mediterranean countries led him to speak Greek and appreciate the teachings of the ancient philosophers.

Northbridge News & Events

SR&ED Events

Northbridge recently hosted a Lunch ’n’ Learn at the Hamilton Chamber of Commerce. It was a great turnout! These events are invaluable to your business and provide a comprehensive explanation of the SR&ED program and how you can benefit from it.

Mark your calendars for upcoming Lunch ‘n’ Learns:

January – Kitchener/Waterloo (Date TBD)
February – Guelph (Date TBD)
March – Halton Hills (Date TBD)

On December 2, Northbridge hosted an informal complimentary breakfast in Sudbury to get better acquainted with our Northern neighbours. We were joined by companies from a range of industries; plastics, biotechnology, food and beverage, textiles, metal casting etc. Stay posted for future events.

News

The office of the Taxpayers’ Ombudsman’s is looking for feedback concerning the recent changes to the application forms and procedures for the SR&ED program. Please visit http://www.taxpayersrights.gc.ca/systmc_nqrs/sred-rsde-eng.html for more information.

Facts & Figures

For every real Christmas tree harvested, 2 to 3 seedlings are planted in its place. Each hectare provides the daily oxygen requirements of 45 people.
The idea for using electric Christmas lights came from an American named Ralph E. Morris in 1895. The new lights proved safer than the traditional candles, which often started fires.
During the holiday buying season, Visa cards alone are used an average of 5,340 times every minute in the United States.
Chanukah can fall anytime between the middle of November and beginning of January. The exact dates are decided according to the Jewish calendar, which is Lunar-based. The 8-day holiday starts on 25th day of the Jewish month of Kislev.
Kwanzaa is celebrated daily from December 26 to January 1. Each day is dedicated to a particular principle (unity, self-determination, collective work and responsibility, cooperative economics, purpose, creativity, and faith), and on each day one of the candles on a seven-branched candelabrum is lighted.

Tips & Tricks

When establishing contracts, be mindful of the level of ‘risk’ assigned to each party. By committing the contractor to a fixed price without exclusion, the contractor inherits the right to claim SR&ED incentives on the work performed.
When preparing the financial data for your claim, be sure to accumulate all of the invoices, contracts and time sheets into one central, and secure location; it is amazing how quickly important documents can disappear. This simple preventative measure is crucial whenever there are changes in SR&ED management.

Ask the Experts

Dear Northbridge,
We are utilising a few sources of external funding in our current growth phase due to the market downturn. Right now we are working with NRC-IRAP and have some manufacturing equipment ITC’s which are helping us shoulder our new scale-up in the turbulent times. My question is: Since we are already receiving some R&D funding AND claiming equipment ITC’s are we eligible for SR&ED tax credits and, if so, is it even worth going through the effort of claiming SR&ED this year?
- Existing Northbridge Client

Dear Client,
Excellent question, we encourage all of our clients to look at as many sources of external funding as possible, for good reason: it all adds up! We have a large contact list of funding agencies which is available to all of our clients, free of charge.

On to the question at hand; in short, yes, it is definitely worth filing for SR&ED, even if you get other funding. The case used to be that you could not have any one project government funded (Federal and Provincial combined) which was more than 75-80%, depending on the province. Due to the current economic climate they have relaxed these rules and allowed 100% of projects to be funded, if done properly. The only thing you cannot do is double-bill the government. If they have paid 50% of a project through NRC-IRAP, you cannot claim SR&ED expenditures for the same project costs. Thus, you can claim on the remaining 50% - the part you are actually spending real company dollars on. ITC’s on equipment purchases are completely separate from SR&ED expenditures, unless the equipment is specifically used for research.

As we always preach, filing SR&ED claims should be an annual occurrence and a continual revenue stream for your company since you are always trying to improve how you do things and become more efficient. If you have any questions or concerns about the program just give us a call, we’ll be happy to crunch the numbers for you!

Have a question for the experts? Send us your inquiry.

Northbridge takes pride in maintaining an unmatched level of customer service to our clients. Our account managers are evaluated based on client feedback - please complete our survey to let us know if Northbridge Consultants met or exceeded your expectations, as well as how we can improve our service to you.

Although we endeavor to ensure timely and accurate information throughout this newsletter, it is not intended to be a definitive analysis of legislation cited, or a substitute for professional advice. Readers are encouraged to seek professional advice when attempting to relate their specific situations to information disclosed within.

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