Tax incentive programs for start-ups & small businesses

 Indo-Canada Chamber of Commerce (ICCC) organized an interactive session on tax incentive programs for start-ups and small businesses as part of the ICCC-CIBC series for Canadian small businesses.

Grant Thornton’s Martha Oner and Jaipreet Bindra were the key speakers at the session. Oner is the Senior Manager, Tax Incentives, and Bindra is Manager, Tax Incentives / Financial Advisory.

Rajeev Misra, General Manager Small Business, GTAW Brampton Vaughan SB Cluster, CIBC, introduced the speakers for the evening. As leader of Grant Thornton’s Ontario Tax Incentives practice, Oner’s role is to help clients across all industries to file maximized and substantiated tax credit claims, and Bindra helps clients across Information Technology, Computer Engineering and Electrical Engineering in the preparation and defense of SR&ED tax credit claims.

In their presentation Oner and Bindra provided a general review of tax incentive programs available for start-ups and small businesses conducting research and development or creating interactive digital media. They specifically discussed the Scientific Research & Experimental Development (SR&ED) and the Ontario Interactive Digital Media Tax Credit (OIDMT) credits.

The presentation, made jointly, introduced the SR&ED and the OIDMT programs. delineating the activities and expenditures that qualify, program statistics and incentives, recent changes, and tips for maximizing SR&ED and OIDMTC claims.

The Scientific Research & Experimental Development Tax Credit is Canada’s largest program to promote/assist Private Sector R&D and grants $3.5b in tax credits to over 21,000 taxpayers annually. The benefits are structured to favor start-ups and smaller firms (i.e. Canadian Controlled Private Corporations – CCPCs) and 75 per cent of the claims are from small/medium CCPCs.

SR&ED requires “a systematic investigation or search that is carried out in a field of science or technology by means of experiment or analysis” and that is basic research, applied research, experimental development, including support activities.

The eligibility criteria doesn’t require the claimant to own a R&D lab, and is open to small businesses operating in the field of of Science/Technology in Canada (i.e. Manufacturing, IT/Software, Oil & Gas, Chem./Plastics, Engineering, Agriculture, Food Science, Biotech., Aerospace, Medical, Environmental, etc.).

Similarly, for claiming the Ontario Interactive Digital Media Tax Credit, a product must be developed at a permanent establishment in Ontario, it is not used primarily for: Interpersonal communication, Present or promote the qualifying corporation, Present, promote, or sell the products or service of the qualifying corporation. All or substantially all (90%) of the product must be developed in Ontario by the qualifying corporation.

Speaking on the occasion, Brij K. Sharma, Director, Trade, SME & Sponsorship, said, “The purpose of holding the speaker series in collaboration with CIBC, the Chamber’s lead corporate sponsor, is to highlight the benefits that are available to the small businesses.” He emphasized that the Chamber is keen to impart information that can materially benefit the small businesses. Naval Bajaj, President, ICCC, also spoke on the occasion.