Blockchain innovation work could fit into Canada’s income tax incentive system for R&D activities. For every $100 of Ontario salary related to eligible R&D activities, your company could be entitled to up to $29 in tax credits or refunds. For small- and medium-sized Canadian controlled private companies, your company could be entitled to up to $69 in tax credits or refunds.
Blockchain, or distributed ledger technology (DLT), is an emerging digital technology that represents a foundational shift in record keeping. It is a way of ordering and verifying transactions in a distributed ledger, where a peer-to-peer network of computers maintains and validates a record of consensus of transactions with a cryptographic audit trail. Innovations behind the technology are occurring regularly.
Those innovations, should they occur in Canada, fit into the Canadian income tax incentives. Some examples are:
1. Platform development – Developing blockchain platforms, and applications that integrate with blockchain platforms that provide a new feature or functionality, or improve existing functionality, performance, reliability, or quality.
2. Smart contracts – Developing smart contracts to perform automation of digital contracts to facilitate, verify, or enforce the negotiation or performance of a contract.
3. Scalable and efficient application – Designing and implementing blockchain applications and architecture that can manage individual processing nodes in a public blockchain or organizations in a sectorwide blockchain; additionally, designing and developing efficient blockchain networks to execute peer-to-peer transactions.
4. Network – Developing the algorithms to manage user privacy and consensus in blockchain networks.
5. Big data projects, data warehousing and analytics – Enabling the collection, efficient processing, and analysis of large volumes of data as it is distributed and secured through blockchain technology.
6. Regulation and governance – Building blockchain applications that comply with the new and evolving regulations.
7. Security and privacy – Enhancing the applications’ security built on blockchain via numerous techniques to ensure data’s privacy protection and security.
Significant potential for tax savings
Many companies, both large and small, may not be aware of the substantial number of activities they may have undertaken that could be eligible for tax incentives. As a result, they tend to place a low priority on the tax incentives so that much of their potential for tax savings remains untapped.
Navigating the course
Our engineers, scientists and tax professionals will visit your facilities and meet with your technical, development and accounting staff. We can help identify, describe and document your eligible activities, and collect any other required information. We can then help to prepare the required forms and integrate the process with your corporate tax returns. We also help you support your claim if challenged by the government.
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