Doing Business in Canada Where to Play and How to Win?
Chris King, Government of British Columbia Chris King is the US East Coast representative for the Province of British Columbia. Chris provide hands-on, fully funded, no-cost assistance to fast-growing US companies, entrepreneurs and investors that are considering setting up, expanding, or maintaining physical operations in British Columbia. He and his colleagues on the US west coast and in British Columbia work to connect start-ups, mid-cap and large corporations to the information and resources they need to locate or expand to British Columbia more quickly and profitably, while reducing operational risk. Easy global access Opportunities in agrifoods, forestry, mining, natural gas, technology, transportation, etc. 2.4 million well-educated, skilled, diverse professionals Attractive business incentives Low business costs 2
Jeff Christie, Partner, Boast Capital Jeff Christie is responsible for new client development, partnerships, and strategic growth at Boast Capital while leading the Business Development Team. Prior to joining Boast Capital Jeff competed as an Olympic athlete for 16 years in the sport of luge. He raced in the 2006 and 2010 Winter Olympics as well as 72 World Cups and 8 World Championships. Jeff is actively involved in the local community. He is a member of the Canadian Olympic Committee (COC) Board of Directors and Athletes Commission; was on the World Petroleum Council Youth Foundation (WPCYF) organizing committee for the 2013 Forum. Jeff traveled to Sochi in 2014 with CBC to commentate the Olympic games and conducts a number of public speaking engagements. Jeff holds a Bachelor of Commerce from Royal Roads University in Victoria, BC. Boast Capital is a team of engineers and finance professionals with over 20 years experience in helping companies in Canada and the U.S. claim and maximize R&D tax credits. We have extensive knowledge about recovering cost through the Scientific Research & Experimental Development (SR&ED) program, Interactive Digital Media Tax Credits (IDMTC), and the US R&D Tax Credit program. 3
Ragu Bhargava, Co-Founder & CEO, Global Upside Ragu and his team at Global Upside help companies tackle accounting, payroll, HR, and compliance challenges in 90+ countries. Ragu goes by the mantra impossible is not in my vocabulary and has helped Global Upside clients successfully navigate some of trickiest business environments. In his previous avatars, Ragu was CFO at ActivIdentity (NASDAQ:ACTI) and held leadership positions in several companies including Deloitte and NetIQ (NASDAQ: NTIQ), where helped the company grow from $20 million to $300 million+ in revenue. Global Upside Footprint Founded 1999 Integrated accounting, payroll, HR, tax, compliance services Consolidated services delivered via single point of contact in your time zone, 24/6 support Serves both startups and established multinationals Clients including A10 Networks, Aruba Networks, 8x8, Enphase Energy, Real Networks, Rhapsody, Zillow, and many more. 4
Why Canada? Welcoming Business Environment: Canada is the best country in the G-20 to do business, according to both Forbes and Bloomberg. Source: Forbes and Bloomberg Strong Growth Record: Canada led all G-7 countries in economic growth over the past decade (2003 2012). Source: The World Bank Low Tax Rates: Canada s overall marginal effective tax rate is by far the lowest in the G-7 - about 17 percentage points lower than that of the United States. Source: Finance Canada Financial Stability: For the seventh consecutive year, the World Economic Forum has declared Canada s banking system to be the soundest in the world. Source: World Economic Forum Highly Educated Workforce: Canada s workforce is the most highly educated among members of the OECD, with half of its working-age population having a tertiary level education. Source: Organization for Economic Co-operation and Development 5
Vancouver British Columbia Innovative, Creative, Sustainable One of the most globally competitive tax regimes with low rates and generous refundable R&D incentives First class infrastructure; Vancouver has North America s best airport; an outstanding public transit system; some of the fastest broadband speeds in the world Closest major port to Asia, one of the world s best natural deep-water harbors and a key international transportation hub Some of the lowest energy rates in North America, primarily derived from clean energy Vancouver is one of top 10 lowest risk cities in the world to recruit, employ, and redeploy business talent Vancouver is a magnet for global talent and investment; in 2013 it attracted more venture capital than any other Canadian city 6
Agenda Location Footprint (Small or Large?) Entity Setup / Activities Finding the right talent Hiring and Employment Law Tax and Accounting Support Managing Canadian operations Compliance 7
Setup and Strategy Where to? Start up Activities Accounting Setup Plan for growth? Representative Office Branch vs. Subsidiary Tax Considerations Money Movement Permanent Establishment (PE) Risks Intellectual Property (IP) Considerations Management Support /Centralization 8
Company Law Compliance Registered Office Substance Over Form (Tax Structure) Taxes: HST/PST/GST/QST, Income, Others Statutory Audit Annual Reports 9
What are your top concern when doing business in Canada? 1. Employment Law 2. Finding the right talent 3. Cost of doing business 4. Staying compliant 5. Taxation 10
Accounting and Payroll Key Filings and Deadlines Payroll Management/Statutory Accounts Corporate and Payroll Taxes Stock Transaction (ESPP, RSUs, Stock Options) AP/AR, Policy, Process, Systems Expertise 11
Hiring and Employment Law At Will employment Does not Exist Compensation & Benefits Statutory Supplemental Stock Options Expatriates Hiring Contractors Know the risks Staffing Employment Law Work Time Regulations Immigration (Visas)/Global Mobility Employee Exits 12
How familiar are you with SR&ED Program? 1. Very familiar 2. Somewhat familiar 3. Not familiar 13
Outline Overview of the SR&ED Program Benefits of Claiming SR&ED Case Study Requirements Do s and Don ts 14
What is SR&ED? 15
Applicable Industries 16
Qualifying Criteria Must meet 3 criteria to qualify for SR&ED Technical Challenge Technical Uncertainty Iterative Process 17
Examples 18
SR&ED Benefits Who Can Claim? 19
SR&ED Benefits Return rates for Non-CCPCs 20
SR&ED Benefits Return rates for SME CCPCs 21
Case Study Software company with operations in Vancouver (non-ccpc) 7 developers (1 front-end, 6 back-end) Salaries are $75K per year and ~65% of time is eligible 22
Case Study Front end development not typically eligible Eligible expenditure pool for salaries would be ~$292.5K ($75K x 65% x 6) Proxy overhead method and non-ccpc rates of return $93.6K worth of investment tax credits (ITCs) 23
Requirements Technical Documentation CRA requires that SR&ED documentation must: Have been documented at the time the work was completed Highlight technical obstacles or challenges Be dated 24
Requirements Time Tracking and Financial Statements 25
When to Claim? File within 18 Months of Fiscal Year End Non-CCPC Claim Turnaround 365 days/12 months 26
Do s and Don ts Do Don t Pay yourself and staff Start time tracking and proper documentation now Incorporate your company Underestimate the importance of documentation Focus on the business opportunity Leave SR&ED claims until the last minute 27
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Questions? Ragu Bhargava CEO Global Upside +1 (408) 219-8203 ragu@globalupside.com www.globalupside.com Jeff Christie Partner Boast Capital +1 (403) 589-2809 Jchristie@boastcapital.com www.boastcapital.com Chris King Representative Government of British Colombia +1 (617) 515-8762 cking@britishcolumbia.ca www.britishcolumbia.ca 30
Thank you for attending. 31