Is your business poised to make the most out of tax incentive programs in 2023? At Easly, we’re proud to partner with Canadian businesses that qualify for tax credits like the Scientific Research & Experimental Development (SR&ED) program and support the continued innovation that comes out of our nation by providing streamlined capital through our Capital-as-a-Service platform. With readily accessible funds available in as little as two weeks, we’re here to support you through the time between capital outlay on eligible SR&ED initiatives and receipt of your refund from the government.
Below, we’ll take a closer look at some of the most anticipated initiatives included in this year’s budget, the Clean Technology, Clean Hydrogen and Carbon Capture, Utilization and Storage (CCUS) tax credits, as well as the benefits of pairing your clean energy incentives with programs like SR&ED. Read on to learn more!
Eye on the Prize: Canada Tackles Clean Initiatives
In 2022, the Canadian Government announced its intentions to step up efforts to remain a global leader in achieving clean energy goals. Significant attention is being given to the Clean Technology, Clean Hydrogen and CCUS tax credits. These new credits are designed to help stimulate and support innovation in clean technology sectors. With a tax credit of up to 30% for businesses investing in core environmental assets like clean electricity generation (wind, solar, small hydropower and small nuclear reactors), stationary electric storage, zero-emission vehicles and up to 40% for the Hydrogen credit, eligible companies can gain considerable financial aid with the right tools in place.
Qualifiers for Applicants
Eligibility requirements for Canada’s clean energy initiatives consist of a few core qualifiers to determine how their credits accumulate. The criteria include:
Companies developing and/or supporting initiatives dedicated to achieving Canada’s net-zero by 2050 goal. Applicants that closely adhere to set guidelines and can demonstrate how their operations help to accelerate clean initiatives will likely receive more credits than those with less supporting evidence.
The Clean Tech, Clean Hydrogen and CCUS programs were designed with the recognition that the cost of pursuing such initiatives is often significantly higher in comparison to the status quo. In order to facilitate the continued adoption and progression of clean technology, these tax incentive programs aim to help offset costs and therefore make the long-term use of renewable alternatives more attainable across the market.
National Advantage, Potential for Innovation, etc.
As mentioned above, the goal of the Clean Energy tax incentives is to drive Canada’s commitment to reach net zero emissions. In order to do so, the government recognizes that it needs to incentivize businesses to help achieve this goal by establishing the nation as a strategic competitor in the global market. Applicants may be subject to an assessment of how their initiatives and/or products provide a national advantage.
Making the Most of Government Incentives
Whether you plan on claiming the Clean Tech, Clean Hydrogen or Clean Carbon tax credits or not (the programs are expected to run until 2035), being aware of additional government-offered incentives is crucial to ensure you have the funds you need to grow while continuing to invest in R&D. The Scientific Research and Experimental Development (SR&ED) Program is one of Canada’s most prominent sources of government funding for businesses, with more than $3 billion in tax credits claimed annually. SR&ED provides a valuable source of non-dilutive funding.
SR&ED is designed for businesses conducting basic research to advance scientific knowledge, develop or increase industry knowledge in a specific area/application, or conduct experimental R&D to create new assets or improve upon existing materials, products, or processes. The capital provided by government incentives from the SR&ED Program is vital to promoting and sustaining Canadian technological advances in clean tech, biotechnological, sciences, engineering, and a wide variety of other sectors, making it a trusted funding source for eligible businesses to pursue.
SR&ED Advances with Easly
SR&ED refunds and incentives are claimed by over 20,000 applicants each year, with the majority of recipients being small business owners. Despite the immense benefit offered by the program it is not without its shortfalls for businesses to consider. Throughout the year, businesses accrue SR&ED credits for various expenditures ranging from salaries and overhead to materials and more. While the CRA tries to review all accepted claims within 60 days and all refundable claims accepted for audit review in 180 days, this is only available after you’ve submitted your T661 with your year-end taxes. The limited window for submitting your claim can leave you without cash flow when it matters most, presenting the need for a reliable interim solution.
Easly Advances make it easy to receive the money you need in order to pursue R&D all year round. Backed by a robust, privately held, award-winning U.S. company, we’ve proudly helped fuel innovation across Canada and have deployed over $130 million in advances to SR&ED claimants. You can receive your first advance in as little as two weeks after applying. Partnering with Easly means you don’t have to wait up to 18 months to receive your refund and can trust that you’ll have funding when it matters most.
To learn more about the role of SR&ED refund financing in your company’s capital-raising efforts, contact Easly today!