Businesses could get more mileage out of government incentives: Ernst & Young

(Montréal – 16 November 2010) At a time when economic recovery remains lukewarm and accessing capital is a major challenge, government incentives can make a difference to the bottom line, Ernst & Young said today at an information session for technology, communications and entertainment (TCE) industry players.

“Programs to stimulate economic development and create specialized jobs abound in Québec. And with the complexity of some regulations, it’s often hard to keep up with them,” noted Francis Guimond, Assurance partner with Ernst & Young in Montréal.

To take advantage of all the opportunities, management needs to stay abreast of the latest developments in tax incentives. The reality is that smaller businesses don’t always have the resources to do this, or to administer new measures.

Ernst & Young has identified the key programs that should be on the wish list of businesses included in the TCE industry.

• Scientific Research and Experimental Development tax credits: These credits are a big advantage for small enterprises because their provincial rate is highly beneficial. Management must be sure to use them at the right time, since they shadow a company's development cycle, which means the window for claiming them narrows as products ripen.
• Refundable tax credit for the production of multimedia titles: Originally, this credit was created for the video games sector, but its field of application is not limited to that area. Many businesses may not know that they qualify.
• Refundable tax credit for the development of e-business: This credit is designed to encourage the computerization of company business processes with a view to enhanced efficiency. Typically, it is aimed at service firms in the IT industry, but many other enterprises that design products are eligible and may not realize it.

“While these three credits seem to target divergent businesses, they are actually very complementary,” explained Krista Robinson, an Ernst & Young tax professional. “They can cover the same projects, and extend the expenditure pool upon which credits are available.”

Canadian businesses should also keep in mind that non-tax government incentives, such as grants, can also help in accessing capital to facilitate growth in this current competitive environment.

Ernst & Young professionals are available to provide insight on the main government incentives for businesses in the TCE industry, and to discuss the above information in greater detail.

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.