SR ED Tax Credits Are Under Attack! Financing SR ED claims Is Business As Usual – How SRED Finance Works

Whew! It's getting ugly out there! Canada’s sr&Ed Tax credits are under attack in a number of different manners. We'll review some of those criticisms and prove to you that financing sr Ed claims is totally... business as usual... if, and its a big if, you know what you are doing.

A recent Canadian national headline story screamed ' flawed r&d scheme cost taxpayers billions '. First of all, it’s not a scheme... it’s a program. (I am secretly hoping my old age pension is not a scheme) We're talking of course about the Canadian Scientific Research and Experimental Development Program - aka ‘SR ED ', 'SR &ED '.

The program has gained significant traction over the years, and not hard to understand why, when the essence of the program is that Canadian privately controlled firms are the recipients of billions of dollars of funding every year, in the form on a non repayable, real money cheque for a large percentage of their research and development. Thousands of firms all across Canada apply every year.

At its essence the program is clearly ' apple pie ' and ' motherhood ' - simply Canadian firms investing hard earned dollars in research of products and processes to further their competitive positions here in Canada, and of course globally, where it counts .

So whats the problem. It's hardly late breaking news to us, but the core issues around the current ' sr ed claims crisis seems to focus on who is preparing them , the dollars that are sometimes wasted or abused in that process, and the governments inability to validate every claim to the level they would perhaps like to .

Who would not agree as a taxpayer or a reasonable person that we would all prefer our tax dollars to be going to programs and things that work. That brings us around to our other core subject area - the financing of sr&Ed tax credits.

Firms in Canada have the option of either waiting for their cheque, which can takes months to a year, of monetizing their claim immediately for cash flow and working capital. In many cases this is the largest one time amount of funds that many new and emerging companies receive.

So why isn’t their a concern over sr Ed financing? That’s because it’s a common sense process based on the quality and size of your claim. A typical financing involves a straight forward business application, with copies of your technical claim and tax filing showing the sr&Ed tax credit has been filed. We spoke of the sred consultants that have proliferated the industry - the reality is that your claim is finance based on its having been prepared by a credible consultant with an industry reputation and experience. Even CRA, formerly Revenue Canada noted that ' the vast majority of claims are compliant '.

When you're financing claims the dollars count. The program itself allows for approximately 35% of your total R&D expenses as a total claim, as validated by yourself or your consultant. When you finance your claim you receive approximately 70% of your total claim as a bridge loan that balance held back as a buffer, and remitted back to yourself less financing costs.

Is there a bottom line? We sure think there is. Take advantage of a legitimate and great government program (not scheme!). Prepare your claim with the aid of a reputable expert consultant with credentials and expertise. If you wish to finance your claim seek the services of a trusted, credible and experience Canadian business financing advisor who will efficiently guide you through the financing process - straight to cash flow in the bank!

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Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations

http://www.7parkavenuefinancial.com/sr_ed_tax_credits_financing_claims_sred.html

SR ED Tax Credits Are Under Attack! Financing SR ED claims Is Business As Usual – How SRED Finance Works

We're going to turn that one thing you need to know about equipment lending for your machinery finance and other lease and loan needs into a multitude of good news benefits !

Let's share and explore some tricks of the trade to make your equipment financing loan or lease strategy more profitable than you ever thought it could be, with options we are pretty sure you have never even heard of that have the potential to turn your lease financing of your assets into a profit center under the right circumstances.

Today we are focusing on the type of decision you make at the start of your machinery finance lease decision. We refer to machinery but of course we're referral to all tangible assets you choose to finance.

When Canadian business owners and financial managers comment the equipment lending process for their financing needs they often, unfortunately do a poor job of determining how they will handle the end of the lease option. This option can make or break the overall cost and profitability around your lease finance decision.

Let's use one practical example and demonstrate our point. Let's say you are following our advice and make a conscious decision that the asset will last you 5 years. (We are sure not talking about computing technology of course! - No 5 year terms recommended on technology!) What you need to do now is ensure that any analysis you make around the cost of ownership to the same term as you have picked for your lease. Mismatching those costs and benefits is highly inappropriate.

So, back to the core of our subject, which is the one thing you need to know - and that is that you have numerous profit and cut your loss type strategies at the end of your lease. Some of this is determined by what you sign up front, further enforcing our point that you need to view the whole equipment lending cycle in your mind at the start of your transaction.

Ok, let’s make some money, or cut our losses. How do we do that ? First of all , if you know for sure that you have a good handle on the assets useful life based on your experience enter into an operating lease , not a capital lease to own, thereby giving yourself the flexibility to return the equipment to the lessor at the end of term . Let the lessor take the risk on the asset and its disposition.

That same operating lease strategy has a dual benefit, if you are at the end of the term, and you think the asset is performing well and generating revenues and profits then agree to purchase the equipment from the lessor at the end of term. Dont forget that you and the lessor need to agree on what its true fair market value is.

Want to renew the lease at the end of our 5 year term - with a view towards still owning the asset. Then negotiate forcefully with the lessor for a reduction in your monthly lease payment. Can you do this? You sure can, because the lessor has already extracted all their profit on the original deal, having assumed you would terminate the transaction.

Here a true secret profit strategy. If you feel there is significant useful life in the asset consider purchasing it from the lessor at its fair market value and then sell or rent it to another firm who might need it. You just turned a former equipment lease liability into a profit center!

One final strategy is to purchase the equipment based on your knowledge of its value, use it for a specified period, and then trade it in for a new upgraded asset - thereby lowering your lease cost on the newer asset!

So, whets our bottom line. It’s simple. You need to be informed about the lease life cycle, understand what the equipment lending cycle is all about when it comes to your options and flexibility. Whether it’s a machinery finance loan, computing technology, or an aircraft, the ability to see your end of term options at the start of your equipment lending decision will make or save you thousands of dollars. Speak to a trusted, credible and experienced Canadian business financing and leasing advisor to reduce your costs and improve your profits by sound lease finance knowledge.
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Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations

http://www.7parkavenuefinancial.com/sr_ed_tax_credits_financing_claims_sred.html