How Transformation 4.0 can benefit your business’s growth? Watch this free webinar and learn about the advantages of adopting this shift in all areas of your business (in French only).

What is Transformation 4.0?

There have been three major industrial revolutions over time: steam-powered machines, production lines and computers. Now we are in the fourth transformation: the digital era.

What are the tangible impacts for businesses? Does the change affect all types of entities?

Here are some of the topics that will be covered:

• The Transformation 4.0 in a nutshell;
• Strategy 4.0;
• Client experience and organizational performance;
• Production cost and profitability analysis;
• Artificial intelligence and advanced analytics;
• Talent management;
• Financial assistance.

This information session is a courtesy of Raymond Chabot Grant Thornton.

Adviser alert – IFRS Viewpoint – October 2018

The Grant Thornton International IFRS team has published IFRS Viewpoint – Accounting for client money.

The IFRS Viewpoint series provides insights on applying IFRS in challenging situations.

Each edition will focus on an area where the standards have proved difficult to apply or lack guidance.

This edition provides guidance on client money – arrangements in which a entity holds funds on behalf of clients.

The issue

Entities may hold money on behalf of clients under many different contractual arrangements, for example:

• a bank may hold money on deposit in a client’s bank account;
• a fund manager or stockbroker may hold money on behalf of a client as a trustee;
• an insurance broker may hold premiums paid by policyholders before passing them to an insurer;
• a lawyer or accountant may hold money on behalf of a client often held in a separate bank account where the interest earned is for the client’s benefit.

If an entity holds money on behalf of clients:

• should the client money be recognized as an asset in the entity’s financial statements?
• where the client money is recognized as an asset, can it be offset against the corresponding liability to the client in the statement of financial position?

You know this already: it’s in your business’s best interest to innovate in order to grow and remain competitive. To help you finance your innovation initiatives, you can rely on several tax advantages, including scientific research and experimental development (SR&ED) tax credits.

Each year, more than 20,000 Canadian businesses share in $3 billion in tax incentives in connection with the federal SR&ED program, which is leveraged by provincial programs, especially in Quebec.

Would you also like to fully benefit from these tax credits? Here are some main points to know about this topic.

1. Any business qualifies

Generally speaking, regardless of the legal form of your business, size and activity sector, you could benefit from the SR&ED program as long as you carry out activities that meet the eligibility criteria.

In other words, no need to be a scientific or technological business to qualify. Furthermore, most claims relate to practical applications, i.e. creating products, processes and devices, including incremental improvement. This is what is known as experimental development.

2. The three criteria to satisfy

Your project must meet the three major criteria to be considered SR&ED:

• It must seek a scientific or technological advancement.
• There must be scientific or technological uncertainty.
• It must include scientific or technical content.

3. Main eligible expenses

The federal SR&ED program offers two tax incentives:

• The deduction of SR&ED expenses to reduce your taxes payable for the current or future tax years.
• An investment tax credit in the form of a cash refund or reduction in taxes payable, or both.

Tax credits may be claimed for four major types of expenses:

• Wages for time worked by employees on SR&ED projects.
• Material used or manufactured during trials.
• Subcontracting expenses (e.g. specialized companies testing your prototypes).
• Third-party payments (essentially, payment to research institutes and consortiums, including universities; in this case, expenses do not have to relate to a specific project undertaken by your business).

4. Thoroughly document your work

The Canada Revenue Agency (CRA) could decide to audit your claim based on different factors. In order to be able to defend your point of view should your claim be contested, we recommend carefully documenting all of your SR&ED work as the project progresses (using timesheets, test reports, prototypes and pictures, among others).

It’s also the best way to precisely assess your SR&ED efforts, and consequently, maximize the tax credits to which you are entitled.

We suggest appointing one or more people to document the process.

5. Obtain guidance

There is too much money at stake and too many nuances in the interpretation of SR&ED support program rules to leave things to chance.

At Raymond Chabot Grant Thornton, we have an experienced team of technical, tax and accounting experts dedicated to SR&ED tax credit claims. We can help you build a strong case and benefit as much as possible from tax incentive programs.