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How Credit Unions can use Innovation as a Tax Advantage

17/11/2010


Innovation pays

Credit Unions have become more multi-textured to meet the needs of their members. Credit Unions do not have multi-million dollar budgets to develop custom banking system solutions to meet all of their member needs but must instead rely on off the shelf banking systems that may not meet their full range of requirements without additional customization. Through the Scientific Research & Experimental Development (SR&ED) tax credit program, the Canada Revenue Agency may allow a Credit Union to receive a refund for a portion of expenditures made to address off-the-shelf system deficiencies, extensions to the application that are required to meet Credit Union business practices, or architecturally based shortcomings.

In addition, Credit Unions spend large amounts of money, IT and business process cycles integrating third party services that are necessitated when Credit Unions offer services such as insurance, brokerage, and payment card services. Newer banking systems provide some additional automation over original banking software however migration to newer platforms can cause serious jeopardy to the perception of financial reliability causing adverse reputational consequences that can be devastating. Whether the Credit Unions’ goal is improving reliability of a technology or process or some other improvement in their key performance indicators, Credit Unions may be eligible for tax credits in relation to these improvements in their core or ancillary systems.

Time matters

Currently Credit Unions are not taking advantage of programs available for the small business-intermediate banking space to the extent they are able. Access to the tax credits do expire. If the above situation applies to you, perhaps it’s time for you to explore these tax credits using MNP’s proven approach and team of expert practitioners.

For more information on Scientific Research and Experimental Development credits and how they may apply to your Credit Union, please feel free to contact myself or any member of our SR&ED Team.

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