incoming tax

An Income Tax Act joke – Leverage favorable ITA provisions!

SRED for CCPCs.

Most people do not want to hang out with an accountant at a cocktail party.  Tax consultant? CRA agent?  Forget about it!

I get it.  But believe it or not, there is a joke about the Income Tax Act.  And I am going to tell it to you!

If you read something in the Income Tax Act that looks like it’s in your favour, you’re reading it wrong!

Despite that joke, there are things in the Income Tax Act which are in your favour.  The SR&ED Program is certainly one thing.  Since 1986, the SRED program has awarded billions of dollars per year to qualifying corporations engaged in technology.  The government’s definition of allowable technology is broad.  Agriculture, industrial processes, winemaking, engineering, IT, and computers.  All fruitful SRED fields where there is prototyping or experimentation and a search for new or improved products and processes.

SRED is particularly lucrative for Canadian Controlled Private corporations, ie SRED for CCPCs.  You get credits at over two and a half times the going rate that large public and/or foreign corporations receive.  Wow!  And your credits come to you as cash (well it is a government cheque or these days, 90% of the time it is a direct deposit).  Double wow.

There is another long-time government program that nets us free money from the government.  No not RRSPs.  That is a tax deferral program only.  Not IRAP.  It is not “large” in the sense of billions of dollars awarded per year.  OK the other free-money large government program is the RESP.  And of course, it is for individuals not corporations.  Part of the RESP since 1995 is something called the CESG which is free money from the government.  Now technically the CESG is matching funds to money you contribute.  And the CESG has restrictions on how when, and where you can spend it.  SRED? No and No.

There is one last set of government programs you should be taking advantage of.  Those are programs related to COVID-19 relief.  These programs are temporary so you need to act while they are available.  I cover the Covid programs in more detail in this post: https://www.g6consulting.ca/sred-during-the-covid-19-pandemic/

You are compelled to comply with the onerous provisions in the Income Tax Act: taxes, tariffs, fees, reporting, surcharges, etc. All 3200+ pages and over a million words of it.  If you don’t take advantage of the precious few provisions in there that you can leverage in your favour, like SRED, you are literally leaving money on the table.  Call G6 Consulting today to see how we can help.