By: Dan Mceachern & Associates  09-12-2011
Keywords: Tax

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There have been a vast number of changes and rulings since the GST/HST was initially introduced in Canada. It is recommended that a specialist review the specifics of your situation to determine if your organization has any GST/HST exposure or are missing any GST/HST savings opportunities. A review should be undertaken at least every two years to minimize penalties and interest for any exposure and to facilitate a full recovery of any missed saving opportunities.

All GST/HST Registrants should have clear understanding how the GST/HST pertains to:

  • Director liability for GST/HST collection and remittance.
  • Bad Debts
  • Taxable, zero rated and exempt goods and services
  • Proper tracing of input taxes among taxable and exempt goods
  • Travel
  • Automobile benefits
  • Zero rated sales to First Nation individuals and organizations
  • Harmonized Sales Tax (HST)
  • Exports

A review is especially important for organizations that benefit from Public Service and General Rebates. The following organizations usually benefit from rebates of Goods and Service Ta x:

  • Municipalities
  • Charities
  • Qualifying Non Profit Organizations
  • University or Public College
  • School Authority
  • Hospital
  • New Housing projects
  • First Nation Organizations
  • Commercial Exports by Non-Resident

The Saskatchewan Provincial Tax rate is not harmonized with the GST. Since the tax is not harmonized with the GST, the administration of the Provincial Sales Tax is costly for businesses operating in Saskatchewan both directly through the additional costs of goods purchased in the course of the business and indirectly through the cost of compliance with two commodity tax systems.

The Province of Saskatchewan has provided some relief from Provincial Sales Tax in specific business areas. A review should be undertaken at least every four years to minimize penalties and interest for any exposure and to facilitate a full recovery of any missed saving opportunities.

A review is especially important for organizations that benefit from specific tax relief. The following organizations and situations usually benefit from a review:

  • Manufacturers and Processors
  • General Contractors
  • Oil, Gas and Potash Drilling and Service Contractors
  • Organizations with Bad Debts
  • Interjurisdictional Carriers - Prorate Vehicle Tax
  • Municipalities
  • First Nations Organizations
  • Movie and film production industry
  • Printers

The Science Research and Experimental Development (SRED) Investment Tax Credit incentives offered in Canada are some of the most generous in the World. Research and development (R&D) is cheaper to undertake in Canada, than any industrialized country including the United States.

Since the Research and Development Tax Credit is administrated through the income tax system, the incentives are available for both large and small Canadian companies. These incentive programs apply to both laboratory research and product development.

"Shop floor R&D" is often overlooked as activities that qualify for R&D incentives.

Scientific research includes both basic research and applied research.

Experimental Development includes technological advancement, new or improved materials, devices, products or processes and incremental improvements

In order to qualify for Research and Development Incentives all of the following Eligibility Criteria must be met:

  1. Scientific or technological uncertainty as to the outcome or approach
  2. Scientific or technological advancement
  3. Scientific or technological content
  4. Activities and expenditures must be verifiable
  5. Activities must be performed by qualified personnel
  6. Must be able to exploit the results
  7. SR&ED must be undertaken in Canada

SR&ED Ineligible Activities

The following activities specifically do not qualify for SR&ED Tax incentives

  • Market research
  • Sales promotion
  • Quality control or routine testing
  • Style changes
  • Research in the social sciences or humanities
  • Routine testing and developing
  • Prospecting, exploring, drilling for minerals, petroleum or natural gas
  • Commercial production
  • Routine data collection

Your business may qualify for SR&ED tax incentives if you have created or improved, new or existing

  • Software
  • Materials
  • Devices
  • Products
  • Processes

In order to survive and prosper in the times of cut backs and globalizations, businesses and organizations must focus on their bottom line. Businesses and organizations usually focus on a wide variety of management approaches such a benchmarking, activity based accounting, downsizing/right sizing, empowerment and reengineering to help achieve a better bottom line.

Often overlooked in the quest for a better bottom line is the routine monthly payments and invoices that an organization receives and routinely pays without any serious analysis. These bills are often referred to as just "a cost of doing business". We work with the owners and the management group to become truly serious about cost reduction. The following areas usually benefit from an overview and should be included in any serious cost reduction program.

  • Workers Compensation Costs and other payroll costs
  • Advertising
  • Janitorial supplies
  • Vendor Selection
  • Telephone /Cellular Phones
  • Freight and shipping
  • Mail and Expense Costs
  • Utility
  • Travel Expenses
  • Legal Costs
  • Office Supply Savings

Based on our board experience with a wide range of Vendors we review specific situations and routinely coach our clients' through the development and implementation of a cost reduction program.

Keywords: Tax

Contact Dan Mceachern & Associates

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