By David Logan - Tuesday, July 7th, 2009
There are various government assistance programs which exist to support businesses in Canada. Often the government support is only accessed after the expenditures are made and some are claimed upon filing your income tax return so there can be a lengthy period of time before the cash can be accessed. These programs will not create initial cash flows but will recover cash already paid. As always, documentation will be required to claim government assistance and planning in advance to keep proper records will expedite a claim.
Consider the following assistance programs to help your business:
Businesses that train apprentices
There is a looming shortage of skilled trade workers and accordingly the government has tax measures to assist businesses with their apprenticeship training programs. The prescribed trades include 49 eligible apprenticeships.
If your business hires apprentices, consider the apprenticeship job creation tax credit (AJCTC) which is a non-refundable tax credit equal to 10 per cent of the eligible salaries and wages paid to an eligible apprentice after May 1, 2006. The AJCTC federal tax credit is $2,000 per year per eligible apprentice. Ontario has a non-refundable tax credit of $5,000 per year per eligible apprentice.
The details regarding how to access these programs are included in our May 2009 newsletter.
Businesses that do research and development
Most businesses are aware of the Scientific Research and Experimental Development (SR&ED) program which provides tax credits for research and development. There are federal and provincial SR&ED tax credits which can be refundable such that the recipient businesses get a refund of the tax credits when they file their tax returns.
The businesses must have and keep record of their qualified SR&ED activities and can file a claim no later than 12 months after the due date of their tax return. The tax filings include a technical description in addition to the required financial information.
The maximum federal tax credit for a Canadian controlled private corporation is 35 per cent of the first $3 million in qualified expenditures, while the maximum for the Ontario Innovation Tax Credit is 10 per cent. There are numerous rules and limitations regarding how these programs work.
For more details, see our May 2007 newsletter.
There is financial assistance available for small- and medium-sized enterprises to hire post-secondary graduates to work on research, development and commercialization of technology in the business. The program is part of the Youth Employment Strategy from Human Resources and Social Development Canada.
The incorporated business must have less than 500 employees and will establish a relationship with the National Research Council (NRC) – Industrial Research Assistance Program (IRAP).
The graduates must be between 15 and 30 years of age, have completed post-secondary education and fulfill certain other qualifications.
The maximum support to the business is $15,000 to assist in paying salary to the graduate.
More information can be found on the NRC website.
Category: Expert Advice.
Industry: Technology, Services
Functional Area: Finance
Tags: AJCTC, apprenticeship job creation tax credit, federal government programs, Industrial Research Assistance Program, IRAP, National Research Council, NRC, Ontario Innovation Tax Credi, Scientific Research and Experimental Development, SR&ED, Youth Employment Strategy
