Many companies involved in research and development (R&D) are eagerly awaiting more news about the proposed tax credits directed towards clean tech, clean hydrogen, and companies presenting innovative solutions for carbon capture, utilization and storage. The government has proposed a tax credit of up to 30% for investments made in low-carbon heat equipment, the use of industrial zero-emission vehicles used for mining or construction, investment in nuclear reactors, wind/hydro/solar systems, and more. Companies pursuing research and innovation have more incentive than ever to continue the push forward in development.
At Easly, we know how important it is for companies that innovate within the Canadian market to have access to the capital and funding support they can count on. These upcoming cleantech incentives are significant for companies in the industry; with the help of additional tax incentives like the SR&ED program, you can fund more of research without having to sacrifice equity to move forward. Below we’ll take a closer look at the government’s proposed cleantech tax credits, as well as the benefits of pursuing the SR&ED program. Read on to learn more!
Creating A Cleaner Future
The Government of Canada has made it clear that it plans to take an aggressive, forward-thinking approach to climate initiatives. In an effort to stimulate homegrown innovation, it intends to formally enact measures and incentives designed to encourage businesses and entrepreneurs to prioritize clean tech practices and tools. The new 30% tax credit offered by the Federal Government is applicable for investments in net-zero technologies, battery storage, and clean hydrogen, with a planned later introduction of additional support for hydrogen production.
This means that businesses across the nation have a new opportunity to expand their funding potential while furthering Canada’s push to become a world leader in the green technology sector. For those that manufacture products or are pursuing R&D related to the development of cleantech products, these new tax credits can be a welcome addition to your capital portfolio and give your operations the extra push forward to succeed in 2023. With more details to come in the spring, now is the time to stay focused and see how you can pursue financial incentives as soon as possible once formal details are announced.
Expanding Your Capital Portfolio
As mentioned above, the anticipated clean tech tax credits make a welcome addition to any capital portfolio. For Canadian businesses looking to expand their reach and secure the necessary funds to aggressively pursue their next phase of research and development, applying for other government incentives like the Scientific Research and Experimental Development (SR&ED) program is vital.
Introduced in 1985, the SR&ED program is one of the country’s largest funding sources for R&D and is directly targeted at supporting businesses in developing new and innovative technology (including clean technology, for example) through tax incentives. The program has expanded considerably since its inception, with a record $4 billion disbursed in 2021 alone. SR&ED is designed for companies conducting R&D within Canada that fit into one of the following categories:
- Canadian-controlled private corporations (CCPCs)
- Other corporations
- Individual proprietorships
Under the SR&ED program, basic research (advancing scientific knowledge without a direct application), applied research (R&D designed to enhance knowledge through a specific application), and experiment development (the creation or improvement of existing practices or materials) are supported. These three categories correlate well with clean technology initiatives, meaning that many companies may find themselves eligible for both SR&ED and the new clean technology tax credits once further details are released in spring 2023. For those looking to grow this year, there’s never been a better time to take a closer look at what government incentives your business can claim!
Finance Your Refund with Easly
Where does a Capital-as-a-Service firm like Easly fit into the tax incentive world? Whether you’re a first-time claimant of SR&ED credits or a repeat filer, the reality is it often takes a significant period of time to receive your refund, even after submitting a successful claim. Not to mention, you need to spend money on R&D throughout the year, leaving you waiting up to 18 months for reimbursement for some expenditures. That leaves you funding your research, covering overhead costs, and spending on continual development, all while your tax credits are tied up and inaccessible.
At Easly, we know that R&D often can’t wait for government timelines to match your objectives. That’s why we’re proud to be one of Canada’s most trusted sources of financing for businesses that qualify for SR&ED tax initiatives. We make it easy to get the cash you need when it matters most. Financing your refund can extend your runway and buy you time to hit critical milestones before seeking dilutive capital. With the help of our non-dilutive capital, you can focus on development. Once our underwriting team has approved your application, you can receive your funding within 48 hours – no headaches, confusion, or stress required.
To learn more about the role of SR&ED refund financing in your company’s capital-raising efforts, contact Easly today!