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Is your winery benefiting from tax incentive programs?

01/07/2008


Running your own winery can be a dream come true for many wine lovers. The thought of enjoying the fruits of your labour at the end of the day, while gazing up at an immaculate sunset can be rewarding both personally and professionally.

While working in the wine business presents a great deal of opportunities, with those rewards come a number of challenges as well. The work involved in running a winery is demanding and understanding the business of wine can be a full-time job. Do you tend to your business plan and tax situation as much as your winery? Are you taking advantage of tax incentive programs for your winery?

Key benefits of the SR&ED program

Electronic moisture probes to monitor soil, weather stations linked to websites, sap-flow monitors that measure vines’ water intake and innovative bottling techniques designed to streamline processes. These are just a few of the new technologies used by some of today’s profitable wineries and growers.

Taking steps towards developing these technologies may seem cost-prohibitive or a task best left to government-funded research groups. However, with the aid of government tax incentives, research and development (R&D) is not solely in the arena of those with deep pockets.

The Scientific Research and Experimental Development (SR&ED) program is a federal tax incentive program available to all Canadian taxpayers. This program allows even emerging wineries and growers to make R&D a regular part of their business operations.

Often, companies fail to make SR&ED claims because they don’t believe their activities are “high-tech” enough to qualify. In fact, a wide range of activities may be eligible for full or partial SR&ED credits. These activities may involve:

  • Developing a new process.
  • Improving an existing process to make it faster, more efficient, more precise, more economical or more environmentally friendly.
  • Creating a new product or enhancing an existing product by resolving a technical challenge common to your industry.

Typical projects that apply to the wine and tree fruits industry can include new or improved bottling techniques; yeast development; advancements in storage and reduced spoilage; sorting techniques; handling and harvesting technology; and pest control.

Wineries and growers routinely encounter and overcome challenges during daily operations. Innovative solutions to these everyday problems may qualify as R&D without you ever knowing. The SR&ED program supports any attempts to improve your business operations, even if they do not prove successful.

Tax credits for your business

The overall goal of the SR&ED program is to help your winery take potential technical risks that lead to improvements in your industry. In B.C., the SR&ED program offers Canadian controlled private corporations (CCPCs) a maximum of $564 (after tax) of investment tax credits for every $1,000 spent on wages. A non CCPC would receive $304 (after tax) ITCs in the same scenario. This translates into real savings for companies willing to invest in R&D.

By Andrew Raphael, Director Agri-Food. Originally published in B.C. Wine Grape Council Newsletter. For more information, please contact your local MNP advisor or Andrew at 1.877.500.0779.