I'm the "technology partner" at KPMG Enterprise, and the vast majority of my clients are in the tech ecosystem. This is probably the hottest industry sector out there, right across the country. The start-up world is amazing and there are almost no barriers to entry. Many of the companies involved are fully ramped up within 18 months, to the point where they've already hired, entered in global contracts, and are thinking about opening foreign offices. This is where I come in, bringing all of KPMG's services to the table.
From the outset, we offer advice about how best to structure the company. We also file their initial tax returns, and at a very competitive price. There's a perception that KPMG is unaffordable for start-ups, but actually we have specific start-up pricing, and we also offer a start-up package that includes tax returns, a notice to reader financial statement and assistance claiming the Scientific Research & Experimental Development (SR&ED) Tax Credit.
The SR&ED Credit is a refundable tax credit that gives start-ups cash back for research and innovation spending, assuming certain criteria are met. This is the lifeblood of tech start-ups in Canada, and it's where KPMG's SR&ED practice working with our Canadian corporate tax practice can provide immediate value. We help companies file, defend and maximize their claims. And we do it on a contingency basis, so they don't have to pay up front. Tech firms that use KPMG can trust that we'll stand by the claim, that we'll defend it if the company is audited, and that we'll maximize returns while staying within the rules.
Tech start-ups also need to think about eventually selling their company, and be aware of all the steps that are part of that process. There's a lot of due diligence. Sometimes companies haven't had an audit, or their statements aren't compliant with accounting standards. Before start-ups decide to go down the path toward a potential deal, I urge them to gain an understanding of all the things that will happen, to accept that there will be a significant cost involved, and to be aware that sometimes the deal won't go through.
There are things you can do under CRA rules if you meet certain criteria. If you're a Canadian-controlled private company, and if you've been operating and holding the shares for longer than two years, there are many tax benefits and a lower capital gains rate. But tax planning strategy, and its implementation, has to happen well in advance of selling the company.
When we're with tech companies from the start, we're in the best position to help them along the way. We grow alongside our clients, and because we offer a full range of services, we can help them succeed.